Old Life Insurance Policies — Trash or Treasure?

If you find an old life insurance policy stuffed away in the attic, you may be tempted to treat it like Confederate money. An interesting artifact, but practically worthless.

But not so fast.You can file a claim on a life insurance policy many years after the insured has died. Unlike most other insurance policies, life insurance policies do not have claim-filing deadlines. As long as the policy was paid up and had not expired at the time of the insured’s death, the life insurance company should pay the face value of the policy.

If the beneficiary of the life insurance policy is still alive, he or she should contact the insurance company and claim the policy proceeds. Any beneficiary should know that life insurance payouts are tax-free, too.

If the named insured of the policy has been dead for several years, the beneficiary may have also passed on. Then the policy proceeds will go to the insured’s estate for distribution to the heirs, according to the insured’s will. If the deceased left no will, the proceeds will be distributed according to the laws of the deceased’s state of residence.

If several beneficiaries were named in the will and one of them has passed on, the insurance company will usually divide the proceeds between the surviving beneficiaries.

Is this old life insurance company still In business?

Often with old life insurance policies, the company that issued the policy may be difficult to track down. You should be able to find the insurer’s name and contact information on the policy. If the name of the insurer, phone number or address are no longer valid, contact the department of insurance in the insurance company’s home state. Insurers merge or stop writing certain lines of insurance all the time, but their state of domicile keeps track of them.

Are you the likely “old life insurance policy” beneficiary of someone who served in the military?

Civilian life insurance policies typically exclude death due to war or the action of a military force. However, unless they opt out of coverage, when members of the U.S. military begin active duty or inactive duty for training or enter the Reserves, they automatically get up to $400,000 in life insurance through the Servicemember’s Group Life Insurane (SGLI) program. Within a certain amount of time after leaving active duty, they can convert these policies into Veterans Group Life Insurance (VGLI) or a commercial life insurance policy.
Depending on the time period of the person’s military service, life insurance coverage might exist under different programs:

• Veterans of World Word I: United States Government Life Insurance (USGLI)
• Veterans of World Word II: National Service Life Insurance (NSLI)
• Korean War-era Veterans: Veterans’ Special Life Insurance (VSLI)
• World War II and Korean veterans with service-connected or serious non-service connected disabilities: Veterans Reopened Insurance (VRI)

One other program —the only one still open to new issues — is Service Disabled Veterans Insurance (S-DVI). These policies are issued to veterans with service-connected disabilities who separated from service on or after April 5, 1951. For more information on any of these U.S. military insurance programs, visit the U.S. Department of Veterans Affairs http://benefits.va.gov/INSURANCE/usgli.asp.