Metlife is an insurance company that also deals with life insurance policies. For beneficiaries, they offer a Total Control Account (TCA). This is a draft account to hold your policy pay out for you “while you go through this difficult time.”
To be clear, the Metlife TCA is not a bank account; it is not a checking account; it is not a savings account. It is not FDIC-insured; it may or may not offer a competitive savings rate; your funds are not as easily accessible as Metlife would like you to believe. Metlife is earning more on the interest of your money than you are.
Money is complicated because a lot of times it is tied to emotions. Death is also complicated and emotional. Unfortunately, the two often meet at a time in our lives when the last thing we want to think about is money. When a loved one dies, there are suddenly a lot of questions that you are expected to answer on the spot. These are things that we have done zero research on. And due to natural circumstances, there isn’t time to shop around. Also, when a loved one dies, your brain turns to mush and stops working. When it comes to these questions, you say a lot of, “I don’t care” and “What do you think?” because you can’t think about anything else other than missing this person who is now gone forever. Nothing will bring this person back so why bother thinking about it. Unfortunately, people and businesses know they can take advantage of this.
Beneficiary Claims Payouts: Lump Sum vs Metlife’s TCA
When my father died in 2014, all he left was a savings account with a small amount of money in it. Once the death certificate was processed, the bank mailed me check. Easy peasy. When my mother died in 2015, she left a life insurance policy where I was one of the beneficiaries. I didn’t realize this until I received a letter in the mail from Metlife about six months after her death. The letter included a beneficiary claims form that had to be completed. It was fairly straightforward and mainly asked identification questions. I did not need to attach a copy of the death certificate. I was not aware of this policy or that I would be a beneficiary, so all of this was a surprise. Also, receiving this six-months after the death brought up a lot of emotions again. So be prepared for that.
On the form, they ask how you would like to receive the policy benefits. Your options are: 1) Lump sum, or 2) Total Control Account (TCA).
Although a lump sum may sound overwhelming, beneficiary payouts aren’t (usually) taxed, so that is one less financial aspect to have to worry about.
The payout amount was not included on the form and I doubted they would tell me over the phone. With my two options, I decided to see what a Total Control Account is just in case it is the better option. From the get go I was planning on going with Lump Sum.
It was difficult to find any non-biased information on the Metlife Total Control Account, which is why I wanted to write about it. There are criticisms of it. In 2010, the company was taken to court because the account was then named Total Control Money Market Account. They were sued over the misleading “Money Market” name, where people were led to believe that it was a bank account when it’s not. The only positive information I could find was from Metlife itself.
I am being fairly objective here but, honestly, I don’t think it’s a good idea to keep large sums of money in a non-FDIC insured bank account.
How the Metlife Total Control Account Works
Here’s a breakdown of the account. It is a draft account. I want to make it clear that this is not a saving account and not a checking account. To withdrawal funds, you are given a draft book from Metlife. They call it a checkbook, and call the papers checks, but it is actually a draft book and you are making drafts. You cannot deposit any money into the account, only withdrawal. In order to withdrawal your money, you have to write a draft to yourself then go to a bank (or check cashing facility) and cash it. However, there is a minimum withdrawal of $250.
These are not checks. You can’t write one to the grocery store, or the funeral home. You can only withdrawal your money when you have access to a place that can cash checks. This may require some planning and should never be used as an emergency fund.
On the plus side, you can write a draft to yourself for the full amount of your account, which will automatically close the account. Or you can save yourself all this headache and just take the Lump Sum.
What about interest rates? The Metlife TCA is insured by Metlife but not by the FDIC, as is the case with most bank accounts. According to Metlife, their interest rates are “competitive”. They state that some of their Metlife TCA accounts are earning 3% interest, though it is more likely you will earn less than one percent.
Of course Metlife earns interest on your money, too. Since they are the ones holding it. Seven years ago, Metlife made $10 Million in investment earnings on these accounts.
The Metlife TCA Is Not A Bank Account
My main caveat with the Metlife TCA is it feels deceiving. Metlife’s literature claims that they are doing you a favor by offering you this account. They take the decisions off your hands during this emotional time so you have one less thing to worry about. You can keep your money in their Metlife TCA and worry about it later. Though, honestly, I’m not sure how that’s any easier than receiving the lump sum and immediately depositing it into your bank account to worry about it later.
Another issue with the account is, despite the catchy name, you really don’t have any control over your money. It is difficult to access and you aren’t choosing the best place for your money. By receiving the lump sum instead, you can choose to put it in a high interest savings account, a CD, or another type of investment. Again, you don’t have to do that right this second. This is an emotional decision. It is an emotional time. But if you have these benefits in one of your bank accounts, rather than a draft account, you have more options open to you down the road.
Remember, Metlife is an insurance company, not a bank.
If you are dealing with this currently, I am sorry you are going through this. Take your time with the decisions you can and don’t rush into anything. If you are not dealing with this right now, inevitably, you will. Learning about these issues will help you make smarter decisions in the unfortunate time that you will have to.