Death claim (settlement) options -- proceeds left at interest

[fed up]

I don't understand why anyone would leave their DB with the carrier because the carrier is earning far more then the DB client while the money sits.

 

[scagnt83]

I don't understand why anyone would leave their DB with the carrier because the carrier is earning far more then the DB client while the money sits.

Because they give them a fixed interest rate to leave it there. No different than getting 4.5% from a myga or cd.

 

[PrivClientSG]

I don't understand why anyone would leave their DB with the carrier because the carrier is earning far more then the DB client while the money sits.

When this client left the DB with the carrier, prevailing interest rates were under 1.5%. The client wanted to take zero risk, have instant and immediate access, and complete liquidity. The carrier was offering 4% -- liquid cash, on demand available and accessible, and guaranteed.

 

[Allen Trent]

Some carriers death claim minimum interest rates are spelled out in the life or annuity contract if truly still sitting on deposit in the carrier death claim account awaiting distribution. Also, many states have escheats laws that require claim settlement in x number of days unless a valid settlement option is taken

Once lump sum selected, most carriers move the funds to a retained assets checking account managed by a banking entity like Northern Trust. During last decade of low interest environment, those retained asset accounts have been some of the most profitable to the carrier. While it appears to the consumer & agent that the money is now with the banking entity, in reality the carrier still has the money invested in their portfolio & merely pay the banking entity a fee each year for managing each of the checkbooks, etc