University of Baltimore Law Review


During a child’s early years, many lessons are learned about the way the world operates. There are many lessons about language— schoolchildren learn how to write cursive, to write paragraphs, and also how to spell. There are lessons about the various continents and countries around the world, the various cultures, and the various careers one can pursue after entering into adulthood. Amidst these lessons, many will receive a piggy bank for the first time to learn the value of saving money. Over time, the value of the money in a piggy bank sometimes yields a surprise. Around a person’s teenage years, he or she often opens up a checking account for the first time. As part of having a checking account, one has to learn not only how to use but also how to balance a checkbook.

Surprisingly, checkbooks are not only issued by Federal Deposit Insurance Corporation (FDIC) insured banks, but also issued by life insurance companies through an account known as a “retained asset account” (RAA). With a retained asset account, a beneficiary under a life insurance contract does not receive a draft for the policy proceeds, but instead receives a checkbook or draft book to draw the policy proceeds from a retained asset account. While in the retained asset account, the money in the account typically earns a small percentage of interest, but the insurance company holding the account also earns interest through a spread.