Until now, banks selling the new Retirement CD - a controversial combination of life insurance and bank deposit - have risked losing money if a customer lives longer than expected.

But now, banks can let another company - North American Reinsurance Co. - take the risk, courtesy of a partnership the New York-based insurer has struck with American Deposit Corp., Pine, Colo., which designed the Retirement CD and licenses it to banks.

American Deposit president Richard E. Fasold said the agreement should assuage critics who have questioned banks' ability to handle the actuarial work underlying the Retirement CD.

The Retirement CD works like an annuity, accruing interest tax-free until an investor retires.

At that point, up to two-thirds of the money can be withdrawn. The rest is used to calculate lump sum payments made until the investor dies. Banks use mortality tables to project how long a person will live. The monthly payments are supposed to just deplete the Retirement CD account by the time the investor dies.

Unfortunately for banks, if an investor lives longer than expected, they are on the hook for continued payments.

It is this risk that North American Reinsurance would assume. Specifically, for a fee, it will agree to make the payments to unexpectedly long-lived depositors after their accounts are depleted.

Three banks, Blackfeet National Bank, Browning, Mont.; National Bank of Santa Fe, N.M.; and National Bank of the Commonwealth, Indiana, Pa., are currently selling the Retirement CD. Another six institutions, which Mr. Fasold declined to name, have licensed the product.

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