For Consumers

Life insurance payouts and Retained Asset Accounts

What is a Retained Asset Account?

When someone with life insurance dies, the insurer sets up an interest-bearing account in the beneficiary's name called a Retained Asset Account (RAA). This account is set up much like a checking account. Typically, the insurer will issue the beneficiary a checkbook.

At any time you're free to write one check for the entire balance or select a different option that lets you draw out the money as needed while it keeps earning interest.

RAA payout options

  • Single payment/lump-sum payment: You can take your payout as one, lump-sum payment.
  • Installment payout for fixed amount or period: You can choose a fixed monthly, quarterly or annual payment, either for a set period of time or until you deplete the account.
  • Installment payout for lifetime: You receive fixed monthly, quarterly, or annual payments for the rest of your life.
  • Interest-only payout: The insurer pays you the interest on a monthly, quarterly or annual basis. The rest of the money remains in the account, untouched. When you die, the money is passed on to your beneficiaries.

Key questions to ask

  • What interest rate is paid?
  • How is the interest rate determined?
  • Will the money be held by a bank?
  • Will the money stay with the insurer?
  • Are any banking services provided?
  • What services are free and what services require a fee?