My mother passed away last week, after surviving my father who passed in 2001, and as named executor for the estate I am starting to go through the various bits of family paperwork stashed around the house. I had been under the impression that my parents had no life insurance, as they had never mentioned it, but in fact I found three policies in a desk, issued to my late father, naming my mother as beneficiary. These are for:
$1000, issued in 1940
$10000, issued in 1954
$1000, issued in 1960.
One was issued by a company that is now defunct, but whose assets have been acquired by another company; the other two were issued by a company that still exists. The $10K policy is labeled ‘Intermediate Endowment policy’ maturing at age 65; the other appear to be basic Whole Life policies. I assume these became assets of the estate upon the death of my mother. My General Question is, is it likely that these policies have value? I’ll be contacting the respective insurance companies later in the week, but don’t want to waste my time.
Generally speaking, the only real way to know whether a policy is valid is to contact the insurance company that is responsible for paying the claim. They’ll be able to look them up and give you the particulars, as well as tell you how to submit a claim. Insurance companies introduce and discontinue policies over the years as the market and tax laws change, so they’d be the best ones to give you this information.
Also generally speaking, life insurance proceeds are tax-free and are generally not subject to probate. The idea is to make sure the beneficiary has cash to pay burial and other expenses that won’t be tied up in probate or subject to estate or other taxes. I’m not sure about the “intermediate endowment” policy, because those are weird little animals, but again, the insurance company can walk you through that.
I am an insurance agent, but I’m (probably) not licensed in your state. These are general statements and not intended to be specific advice.
I’ve dealt with this situation many times when relatives have appeared with old policy documents. I’d echo **Ms Robyn’s ** advice: yes, contact the companies concerned. Different jurisdictions have different rules, but here, if the policies were appropriately paid up, then it’s likely that the insurers would be required to pay out the benefits as contracted.
No “likely” about it. Unless the policy has lapsed because the insured didn’t pay the required premiums or cashed it in, the insurance company has to pay off; it’s breach of contract if it doesn’t.
Insurance is a simple contract. The policyowner agrees to pay premiums and the insurance company agrees to pay the face value when presented with a valid claim. The devil is, of course, in the details, but that’s the gist of it.
I agree. But there may be circumstances where those policy details include a time limit on claims. I’ve seen an example. That’s why I said “likely” and not “definite”.
The main issue here is whether the policies are in force. Given how old the policies are, it’s probable that they are not in force. (It’s not unusual for people to stop paying the premiums, have the policy lapse, but still keep the contract.) If the policies are in force, then the insurance company will pay, plus interest.
Whether they are in force depends on whether the appropriate premiums were paid, subject to the terms of the policy.
The insurance company will offer their opinion based on their records, which may or not be accurate, especially if they bought another company’s business a long time ago. And, although technically you could dispute their decision (by providing receipts or bank records) if they said that the policies were not in force, I’m sure that you don’t have those records so you’ll just have to take the insurance company’s word for it.
Nitpick: Technically, the policyowner does not agree to pay premiums, or to do anything under the contract, which is a rare case of being unilateral rather than bilateral. Of course, if the policyowner does not pay the premiums required to keep the policy in force, the policy will lapse, but the insurance company cannot force the policyowner to pay premiums or sue for not doing so. However, if the necessary premiums are paid, and the policy is in force, the insurance company is subject to all of the contract’s provisions, including the obligation to pay the death benefit upon satisfactory proof of the insured’s death.
Also, really picky nitpick: Usually, the death benefit is the face value (or face amount), which is the amount of coverage at the time the policy is issued, but, the death benefit can be lower or higher than the face amount, depending on the terms of the contract.
Abirode, your post essentially spelled out my main points.
In my (admittedly limited) experience, along with the experiences of other agents in my office, policies that were issued that long ago may still be payable. As you pointed out, life insurance policies often have provisions that spell out what happens if the policyowner stops paying premiums. With whole-life policies, that may mean that the policy becomes “paid-up”; that is, that no further premiums are due, but the death benefit is lowered. Some also have a set age after which no further premiums are required to maintain the death benefit. These are the details that are the devils of life insurance, and these are details that only the responsible company can give.
Another source of information the OP may seek out is your parents’ agent. Your parents may have made payments to the agent instead of the insurance company, and the agent may have those records as well. If nothing else, the agent can run interference with the insurance company by making the necessary inquiries and filing the necessary paperwork.
At any rate, my main points are that the policies could still be in force (not that it’s likely that they are), and that the only way to know for sure is to contact the insurance companies or the agent. It may be only a few grand, but it’s worth looking into.