Life Insurers Give Beneficiaries Checkbooks, But the Accounts Aren’t FDIC-Insured
Thursday, July 29th, 2010
When it comes time to pay out life insurance benefits, a number of companies have found a way to do their duty and yet keep the money in their own hands, too. They send the beneficiary a checkbook for what might seem to be a checking account. But in fact the money isn't in a bank, and the account isn't insured by the Federal Deposit Insurance Corp. It's in an investment account from which the insurer profits, by paying the beneficiary only a small portion of the interest it is earning on the money, Bloomberg reports. Such retained-asset accounts are…