What is a Retained Asset Account?

John Darer • August 17, 2025

A Tool to Deal with the Now and Allow Time for The Soon and Later

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What is a Retained Asset Account for Beneficiaries?


  • A Retained Asset Account (RAA) is a financial account typically established by life insurance companies to manage death benefit proceeds.
  • Key features of RAAs include: functioning as a checking account, allowing beneficiaries to access funds via a checkbook rather than receiving a lump sum payment; serving as a temporary repository for funds, giving beneficiaries time to consider financial options at their own pace; earning interest from the date of death until the settlement date while the beneficiary determines how to manage the money; and generally being free of fees for creation after filing a life insurance claim.


Are Retained Asset Accounts FDIC Insured?


No, the principal and a minimum rate of interest are both guaranteed by the life insurer. Additional interest is credited to the account at a rate declared by the insurer; the credited rate is comparable to that paid in similar accounts offered by banks and money-market mutual funds. Beneficiaries get free checks and periodic reports on the status of their account.


All 50 states and the District of Columbia regulate insurers through various mechanisms: overseeing policy rates, ensuring solvency standards, enforcing consumer protection laws, and monitoring market conduct.


  • Licensing: Life insurers are required to obtain a certificate of authority to operate in each state, ensuring adherence to state-specific regulations. Their agents and appointed must also be licensed in the states where they conduct business.
  • Financial Oversight: State insurance departments oversee solvency through reserve requirements, Risk-Based Capital adequacy ratios, and annual audited financial statements. For instance, they enforce regulations on policyholder funds, which are typically required to be invested in secure assets such as federal securities or approved real estate.
  • Consumer Protections: States implement measures like grace periods, free-look periods, and standardized disclosures to protect policyholders. How You’re Protected - NOLHGA
  • Product Approval: Insurance products, such as term or permanent life policies, must be approved by state regulators, and variations exist across states.



How Long Have Retained Asset Accounts Been Available?


Since 1984. As a former Northwestern Mutual agent I vividly recall when the company introduced its Access account in the late 1980s. NML gave a check book to the beneficiary, then with up to $25,000 against the policy proceeds so that the beneficiary could pay for funeral costs and other immediate expenses without the undue emotional pressure that comes with financial planning during a life transition. It buys time.


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