Gerry Goldsholle has come up with a draft of a “bill of rights for retained asset accountholders.”

A retained asset account (RAA) is a vehicle for putting life insurance benefits in something that looks like a checking account rather than paying benefits out in the form of a lump sum.

Critics say RAAs often pay lower interest rates than bank accounts and are not insured by the Federal Deposit Insurance Corp. (FDIC).

Supporters say RAAs pay rates comparable to the rates provided by other safe, highly liquid accounts, are backed by state insurance guaranty funds, and give grieving beneficiaries the ability to put off making complicated financial decisions until they are in a better frame of mind.

Goldsholle, who says he invented the RAA concept in 1983, when he was an executive at a unit of MetLife Inc., New York (NYSE:MET), says the 120 life insurers that use RAAs ought to agree to an RAA holder bill of rights.

Goldsholle says an RAA should be free; pay interest rates that are at least equal to an independent, outside index; and provide immediate access to funds to an RAA holder who writes a check or draft drawing on an RAA.

Insurers also should treat RAA funds as the exclusive property of the beneficiary and tell beneficiaries that that accounts are backed by insurance guarantee associations rather than by the FDIC, Goldsholle says.

Goldsholle is the founder of Advocate Law Group P.C., Sausalito, Calif., a company that represents consumers in disputes with insurers.

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