How Do I Find Out If an Old Life Insurance Policy Is Worth Anything?

Adequate life insurance is an important part of anyone's financial planning process. However, needs change over time, and it's not unusual to misplace or forget about a policy. Although unpaid term life policies quickly lapse, permanent whole life or universal life policies sometimes remain in force, using the accumulated cash values to pay the premiums or to purchase a smaller amount of paid-up insurance.

If you find a permanent policy you've forgotten, it might retain some cash or insurance value. If you find a policy belonging to a deceased relative, it might still pay out to the beneficiaries.

TL;DR (Too Long; Didn't Read)

To find out if an old life insurance policy is worth anything, you'll need to contact that company that issued the policy.

A Policy You Own

If you find a policy that belongs to you, contact the company that issued your policy. If the company has changed its name since the policy was issued, or if it's been involved in a merger, you might need to do a little research. Your state's insurance bureau is one place to start.

Ask the insurer for a document called a policy-in-force illustration. This details the cash values, surrender values and amount of your death benefit, as well as other pertinent information such as the beneficiaries. You will typically need to provide the policy number and personally identifiable information in order to receive the illustration.

Review the document with an agent of the company, or with another financial adviser. Evaluate whether the policy is of use to you in its current form, either as equity or life coverage. Cash out the policy or retain it, as your needs suggest.

A Policy You Don't Own

Contact the issuing company, and give it the policy number. If you can't find a policy but you suspect one exists, provide supporting documentation such as canceled checks or bank statements showing payments to the insurer. The company might also ask you to document your relationship to the policyholder.

Provide the insurer with documentation of the policyholder's death. Although the laws vary from state to state, typically insurers will pay out for a policy within five years of the death. If the policy is outstanding longer than this, proceeds are usually paid to the state's unclaimed-property office.

Call or write the unclaimed-property office, providing full details of the deceased person's identity, and the name of the insurance company if you know it. The state will pay out the policy's death benefit to the named beneficiaries once its documentation requirements are satisfied.

Other Considerations

If you choose to cash out or "surrender" an old life insurance policy, bear in mind that any proceeds become taxable income and must be listed on your next return.

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