You may have noticed negative publicity lately regarding some life insurance companies and retained asset accounts. Many commercial insurance companies (some servicing SGLI beneficiaries) have been providing a "checkbook" to beneficiaries instead of the death benefit proceeds as payment. In most instances, there is no bank account attached to these checkbooks; rather, their accounts are being held in a general corporate investment account, earning investment income for the benefit of the company, while the survivors receive uncompetitive interest rates.Does AAFMAA participate in these practices?No, absolutely not. AAFMAA invests settlement amounts for the benefit of the survivors. Any income after expenses always gets returned to the members or their survivors in some manner.How does AAFMAA notify beneficiaries about their death benefit proceeds?AAFMAA offers beneficiaries four settlement options:a. Life Annuityb. Life Annuity with 10 Years Certainc. Interest Onlyd. Lump SumFor options "a," "b," and "c," AAFMAA guarantees a 4 percent interest rate. If AAFMAA?s Net Yield on Assets (NYA) exceeds the guaranteed 4 percent (which has traditionally been the case), the beneficiary receives the difference between 4 percent and the actual return achieved in the ?thirteenth check?. For example, in 2009 AAFMAA achieved a 4.6 percent NYA. So, the thirteenth check (sent on May 1 each year) is for 0.6 percent times balances.Additionally, at the time of death AAFMAA sends out a settlement options form to explain the options and ensure that all actions taken by AAFMAA are clearly disclosed and understood by the beneficiary.Does AAFMAA have retained asset accounts?No, AAFMAA does not have retained asset accounts. All funds are always invested for the benefit of members or their survivors. As a pure non-profit, mutual association, any income after expenses goes to members or beneficiaries in higher reserves, higher cash values, higher partial premium refunds, or higher death benefits.
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