Is an Old Life Insurance Policy Worth Anything?

Over time, policies can be forgotten, tucked away in old files, or lost during moves. You might wonder: Is that old life insurance policy still worth anything? The answer depends on the policy type, its status, and what you do next. In this guide, we’ll walk you through how to find out if an old policy has value, what factors affect its worth, and what steps to take if you discover one. 

Why Check Old Life Insurance Policies?

Life insurance policies are often purchased during big life moments—like getting married, having kids, or buying a house. As years pass, these policies can slip from memory. Maybe you changed jobs, moved, or lost track of paperwork. But even old policies can hold value, whether through a cash payout, a death benefit, or the option to sell the policy. Checking their worth can bring financial benefits or peace of mind for you and your family.

Types of Life Insurance Policies

To figure out if an old policy is worth anything, you need to know what kind it is. Different policies have different features that affect their value over time. Here’s a breakdown:

Term Life Insurance

• What it is: Covers you for a set period, like 10, 20, or 30 years. If you die during the term, your beneficiaries get a payout. If the term ends, the policy usually expires.
• Value over time: Term policies don’t build cash value. Once the term is over, they’re typically worthless unless you can convert them to a permanent policy.
• Example: A 20-year term policy from 1995 likely expired by 2015 and has no value unless it was converted.

Whole Life Insurance

• What it is: Covers you for your entire life as long as premiums are paid. It also builds cash value, which you can borrow against or withdraw.
• Value over time: Old whole life policies can have significant cash value, especially if premiums were paid for decades.
• Example: A policy bought in the 1980s could have tens of thousands in cash value today.

Universal Life Insurance

• What it is: A flexible permanent policy where you can adjust premiums and death benefits. It also builds cash value.
• Value over time: The cash value depends on how the policy was managed. Old policies might still have value if premiums were paid.
• Example: A universal life policy from the 1990s could have cash value, but it varies based on premium payments and interest rates.

Variable Life Insurance

• What it is: A permanent policy where the cash value is invested in options like stocks or bonds. The value depends on investment performance.
• Value over time: Old variable life policies can be worth more or less, depending on how the investments performed.
• Example: A policy tied to a strong stock market could have grown, but a poor market could reduce its value.

Factors That Determine a Policy’s Value

Several factors decide whether an old life insurance policy is worth anything. Here’s what to consider:

Policy Type

• Term policies usually have no value after the term ends. Permanent policies (whole, universal, variable) often have cash value or a death benefit.

Premium Payment Status

• If premiums are up to date, the policy is likely still active. If payments stopped, the policy might have lapsed, but permanent policies may stay active if cash value covers premiums.

Policy Lapse

• Lapsed term policies are usually worthless. Lapsed permanent policies might still have cash value, depending on how long premiums were paid.

Cash Value or Surrender Value

• Permanent policies build cash value over time. You can surrender the policy for this amount, though it’s often less than the total premiums paid.

Death Benefit

• If the policy is active, it can still pay a death benefit to beneficiaries when the policyholder passes away, even if there’s no cash value.

How to Find Out If an Old Policy Is Still Valid

If you suspect you or a loved one has an old life insurance policy, follow these steps to check its status and value:

1. Contact the Insurance Company

• If you know the insurer’s name, call them with the policy number. They can provide a “policy-in-force illustration” showing the current cash value, surrender value, and death benefit.
• If the company has merged or changed names, check with your state’s insurance department for help.

2. Check Financial Records

• Look through old bank statements, tax returns, or financial documents for signs of premium payments. Annual charges might list the insurer’s name.

3. Use Online Tools

• The NAIC Life Insurance Policy Locator is a free tool to find lost policies. You’ll need the policyholder’s name, Social Security number, and date of birth or death.
• Check your state’s unclaimed property database, like NAUPA, for unclaimed life insurance proceeds.

4. Hire a Professional

• Life insurance locator services can track down lost policies for a fee. They’re useful if you’ve hit a dead end.

What to Do If You Find an Old Policy

Once you’ve found an old policy, you have several options:

Keep the Policy

• If it still provides needed coverage and you can afford the premiums, keeping it might be best. This is especially true for permanent policies with a large death benefit.

Surrender the Policy

• You can surrender the policy for its cash value. This is often less than the premiums paid, but can still be significant for older policies.
• Tax Note: The gain (cash value minus premiums paid) may be taxable, so talk to a tax professional.

Sell the Policy

• Through a life settlement, you can sell the policy to a third party for a lump sum, often more than the surrender value but less than the death benefit.
• Life settlements are common for policies worth $100,000 or more, especially for seniors or those with health issues. According to the Life Insurance Settlement Association, settlements can yield up to 622% more than surrendering.

Reinstate the Policy

• If the policy lapsed, you might reinstate it by paying back missed premiums plus interest. Some policies require proof of insurability if too much time has passed.

Special Considerations for Beneficiaries

If you’re a beneficiary of an old policy, here’s what you need to know:

How to Claim a Policy

• Contact the insurer with the policy number and proof of the policyholder’s death, like a death certificate. The insurer will guide you through the claims process.

Time Limits for Claims

• Most insurers pay out within 5 years of the policyholder’s death. After that, unclaimed proceeds may go to the state’s unclaimed property office, where you can still claim them.

Finding Unclaimed Policies

• Use the NAIC Life Insurance Policy Locator or check state unclaimed property databases. The Insurance Information Institute notes that insurers have paid out $1.1 trillion in claims over the past two decades, showing their commitment to honoring claims.

Real-Life Examples

Here are two scenarios to show how old policies might turn out:

• A Valuable Whole Life Policy: A 65-year-old finds a whole life policy from the 1970s. After paying premiums for 40 years, the policy has $60,000 in cash value. They decide to borrow against it for retirement while keeping the death benefit for their family.
• An Expired Term Policy: A woman discovers a term policy from 1990. The 20-year term ended in 2010, and since it wasn’t converted, it’s now worthless. She uses this as a reminder to review her current insurance needs.

Tips to Stay on Top of Your Policies

To avoid losing track of life insurance policies:

• Inform Beneficiaries: Tell your beneficiaries about your policies and where to find documents. This prevents unclaimed policies.
• Review Regularly: Check your policies every few years to ensure they still meet your needs.
• Compare Costs: Older policies might have higher premiums. Compare them to new policies to see if you can save money.

Conclusion

An old life insurance policy can be a hidden gem or a forgotten relic, depending on its type and status. Term policies often lose value after their term ends, but permanent policies like whole, universal, or variable life can hold significant cash value or death benefits. 

By contacting the insurer, checking financial records, or using tools like the NAIC’s locator, you can uncover a policy’s worth. Whether you keep, surrender, or sell the policy, knowing its value can help you make smart financial choices. Don’t let an old policy sit forgotten—check its worth today.