Insurance regulators issue consumer alert on death benefits

Before you go, we thought you'd like these...
Before you go close icon
State insurance regulators have issued a consumer alert about the industry practice of retaining death benefit funds rather than paying them in a lump sum.

The National Association of Insurance Commissioners is warning beneficiaries about retained-asset accounts, or accounts where insurers hold onto and invest death benefit proceeds, instead of issuing a lump-sum check to the beneficiaries. Often beneficiaries receive a checkbook-like account that's not insured by the Federal Deposit Insurance Corp.

Bloomberg Markets magazine reported in July that insurers profit by holding and investing $28 billion owed to 1 million beneficiaries.

"You may be able to earn a higher rate of interest on the life insurance proceeds if you select a different payout option," the alert said. "While the documents you receive might look like a checkbook, it might actually be drafts, which are similar to checks, but different in some ways."

New York Attorney General Andrew Cuomo has opened a fraud probe and subpoenaed insurers including MetLife and Prudential Financial in connection to the practice.
Read Full Story
Credit Card Compare

Credit Card Compare

Whether you're looking for great travel rewards or low annual fees, find the card that's right for you.

Compare Now

From Our Partners