You already know that vegetables cost more when you buy them prewashed, presliced, and premixed in convenient plastic bags. There's something like that going on in life insurance, too, if you as an insurance beneficiary or your survivors opt to collect benefits from what's known as a "retained asset account."

A retained asset account is an arrangement in which the single lump-sum benefit that surviving beneficiaries might expect to get is put into a special checking account from which the survivors may draw.

If you are a survivor, you don't have to keep the money in an account like this, but many life insurance companies give you the choice. Insurance companies say that the accounts offer a special convenience for beneficiaries who don't want to make major financial decisions involving potentially large sums of money soon after a loved one dies, or simply cannot make those decisions.

Insurers have been offering the accounts since 1984, but they became controversial this summer because many military life insurance policies provide for retained asset accounts—and some survivors of fallen soldiers in Iraq and Afghanistan believe they are being ripped off by the arrangement.

The problem is the cost of convenience. Insurance companies still own the money in retained asset accounts until the surviving beneficiaries pull it out. If for some reason the beneficiary never writes checks for all the money in the account, the insurer never really pays the full amount called for in the policy holder's contract. But critics say the greater cost to consumers is the interest they don't earn while their money remains in the accounts. The insurers get to keep that.

Most insurers do pay interest on money in retained asset accounts. Recently, that rate has been running between 0.5 percent and 1 percent annually, which, according to Bankrate.com, is a bit more than the 0.4 percent that Kansas City area bricks-and-mortar banks were paying on $100,000 or larger money market accounts in early August but a bit less than the 1.25 percent that online banks offered.

But New York Attorney General Andrew Cuomo, whose office is looking into some big insurers' contracts with policy holders, says insurers may be making a lot more money off the accounts than they are sharing with consumers. By some industry estimates, insurance companies are making between 4.5 percent and 5 percent on as much as $28 billion they are holding for beneficiaries.

Insurers deny they are ripping off anyone. They are "investing the money generally in low-risk, conservative investments, to ensure the money is available on demand," says the American Council of Life Insurers, a trade association of companies managing about 90 percent of the life insurance and annuity money in the United States.

The accounts pay interest rates that are competitive with what banks or savings and loans offer on similar deposits and are backed by the financial reserves of insurance companies that are watched closely by state insurance regulators, the American Council of Life Insurers says. And insurance companies welcome that oversight, the group said in a formal statement in late July.

The National Association of Insurance Commissioners, in Kansas City, recently announced that it is beginning a review of plans around the nation to take a closer look at how such arrangements serve consumers.

Kansas is one of six states with formal rules addressing requirements for retained asset accounts offered in its borders. Kansas law requires that insurers get approval for such arrangements from state insurance regulators before including them in a contract unless beneficiaries agree to waive that requirement, said Bob Hanson, a spokesman for the Kansas Insurance Department.

In addition, any such agreement must explain in detail how the check-writing features work, who is providing any banking services that are offered, how to contact those providers, and what other settlement choices are available. The agreement must also explain potential tax treatments for interest earned in the account and must allow beneficiaries, in effect, to cash out the account anytime if they want to spend or invest the money elsewhere.

Kansas consumers who have questions or problems with such accounts may call the Kansas Insurance Department at 800-432-2484 or visit www.ksinsurance.org. Additional consumer information also is available at the American Council of Life Insurers Web site, www.acli.com, and the Insurance Information Institute site, www.iii.org.