Feb. 24 (Bloomberg) -- Life insurers must pay beneficiaries the full amount of what is owed on policies and not hold the money in their own accounts without their permission, the New York Department of Financial Services said today.

“For years, the life insurance industry has been earning hundreds of millions of dollars by holding life insurance payouts of America’s soldiers, veterans, and others in so-called retained asset accounts,” Benjamin Lawsky, superintendent of the department, said in a statement today. “ The accounts often pay the beneficiaries a much smaller interest rate than they could make by investing the funds themselves.”

--Editor: Peter Eichenbaum

To contact the reporter on this story: Dan Kraut in New York at Dkraut2@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net