You found Great-Grandpa’s life insurance policy in an old trunk? Don’t throw it out!
Unlike many types of insurance, most life insurance policies don’t have claim-filing deadlines. You can file a claim many years after the insured has died and the insurer should pay the policy’s face value, as long as the policy was in force (paid up and not expired) at the time of death.
Of course, if you find a very old policy, it might not be as easy as calling your family’s insurance agency for assistance. Insurance companies change, merge, get sold or change names. Some will sell blocks of policies to other insurers, especially if they decide to stop writing a particular type of policy or stop selling coverage in a particular state. Some insurers even go out of business.
If the phone number, address or name for the insurer are no longer valid as listed on the policy, contact the insurance department of the insurance company’s home state. The insurance department will have records on the insurer’s current contact information, along with any information on mergers, name changes or other changes. If the insurance department has contact information for the insurance company, or its successor, you can contact the company to find out whether it ever paid a claim on your policy. Be prepared to provide a copy of the death certificate.
Most civilian life insurance policies exclude death due to war or the action of a military force. For this reason, members of the military automatically receive up to $400,000 in life insurance coverage through the Servicemember’s Group Life Insurance (SGLI) program when they begin active duty, inactive duty for training or enter the Reserves, unless they specifically opt out. Servicemembers can convert these policies to Veterans Group Life Insurance (VGLI) or a commercial life insurance policy within a certain time period of leaving active duty.
Military members who served before the Vietnam War might have coverage under a different program. These include United States Government Life Insurance (USGLI), generally issued to Veterans of World War I; National Service Life Insurance (NSLI), generally issued to Veterans of World War II; Veterans’ Special Life Insurance (VSLI), generally issued to Korean War-era veterans; Veterans Reopened Insurance (VRI), generally issued to World War II and Korean veterans with service-connected or serious non-service connected disabilities; or Service Disabled Veterans Insurance (S-DVI), issued to Veterans who separated from service on or after April 5, 1951, with service-connected disabilities. The last program is the only one still open to new issues. For information on these policies, contact the insurer listed on the policy or the Veterans Administration.
What If You Aren’t a Beneficiary of the Policy?
If a policy names you as a beneficiary, you can usually receive the policy proceeds free of income tax. If the policy names more than one beneficiary and one or more have already died, the insurance company will generally divide the proceeds among surviving beneficiaries according to whatever percentage or term each beneficiary was supposed to receive under the policy. The American Council of Life Insurers explains it thus, “If a spouse was to receive fifty percent of the proceeds, for example, and the children the remainder in equal amounts, the spouse’s share will be distributed equally among the children if the spouse dies prior to or just after the insured individual.”
If no beneficiaries remain, the proceeds become part of the insured’s estate and will pass to heirs according to his/her will. If the insured had no will, the insurer will follow state law regarding distribution of policy proceeds to family members.
Life insurance can provide financial benefits for several generations—for more information on life insurance, please contact us.