The use of retained asset accounts by some life insurers was a key topic of debate at a quarterly meeting of the National Association of Insurance Commissioners (NAIC) in Seattle yesterday.
The NAIC recently created a new working group to review the use of retained asset accounts by insurers and to study whether appropriate consumer protections are in place.
It has also issued a consumer alert on retained asset accounts explaining what consumers need to know about life insurance benefit payment options.
The increased regulatory scrutiny follows a Bloomberg markets magazine article that focused on how the industry practice affected the beneficiary of a $400,000 life insurance policy Ã¢â‚¬“ the mother of an army sergeant killed in Afghanistan.
A weekend column in the Wall Street Journal by Leslie Scism and Erik Holm poses the question: are life insurers playing fair?
In a Q&A format, the article explains how retained asset accounts work and attempts to sort out whether beneficiaries understand their payout options when an insured person dies.
I.I.I. chief economist and senior vice president Dr. Steven Weisbart recently noted that the use of retained asset accounts is a life insurance industry practice that has served beneficiaries well for a quarter century and has generated few if any complaints to state insurance departments.
For more information, check out the I.I.I. fact sheet on retained asset accounts.