Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 22, 2021

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Life insurance Q&A: “How to check the value of an old life insurance policy?”

Perhaps you are named a beneficiary on a life insurance policy purchased by a relative who has recently passed. Maybe you just remembered there was an old policy you stopped paying attention to. Depending on the type and age of the policy, it may or may not be active. The value may also change based on the payments that were made along the way.

Regardless of the reason behind it, there are a few steps you can take to determine if an old life insurance policy has any cash value.

What type of policy did you buy for your life insurance?

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First, you will need to determine if the policy is a cash value or any other type of permanent policy. These are going to be your whole life and universal life policies.

If it’s not one of those, a term life insurance policy for example, there is likely no cash value on the policy. So don’t be surprised if there’s nothing in the way of cash. Some term policies can be rolled over to be more permanent. The person paying the dues would have to take steps to make that happen, though. Don’t be surprised if you find out your insurance company didn’t tell you everything. Some people don’t even know their life insurance policy can expire until it’s too late.

1. Your search may be over quickly if the individual who passed kept organized financial records. A simple review of the most up-to-date policy statement should tell the whole story. Save the statement even if it is outdated.

There is important information on the statement you can use for the rest of the steps you may need to take as part of this process.

2. Using the Declarations page, usually the first page of the life insurance policy documents, attempt to locate the name and contact information of either the insurance agent or company that issued the policy, and give them a call.

With the proper contact info, you should be able to get a great deal of information about the policy, including whether or not it has cash value, with just a single phone call. This would be, of course, assuming you’re a named beneficiary or other authorized party with the insurance company.

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What if the life insurance policy has cash value?

At this point, you will have to make a decision on what you are going to do with the policy. Most people think of life insurance, and they think of a payout when the original buyer dies. You can talk to your insurance agent about your life insurance coverage. Some companies now offer the option to accelerate part of your payout if you get cancer, multiple sclerosis, or other debilitating diseases. You would need to talk to your insurance agent to check the requirements and exact amount if this option is available to you.

Depending on the type of life insurance policy purchased, you may retain the option to “cash in” the policy for whatever the surrender value is or keep the policy in-force as an investment. Again, this depends on the company. If you want to know more about your policy, your insurance agent is the best contact for basic questions.

Keep in mind that the surrender value will often times be less money than the current cash value.

Regardless, you may want to seek the advice of a financial advisor when making your decision as it could have a variety of implications. Any time you get a payout, there are also tax liabilities to consider. If brought in early, a financial advisor can help you structure it to minimize your losses.

Where should you shop for a permanent life insurance policy or other options?

If you’re looking for a cash value life insurance or other type of life insurance policy, always shop around. Make sure the premium payment fits in your current budget. But also make sure you know what you’re getting. A short-term policy may be cheaper, but it can also expire without paying your beneficiaries a single dime. You can get quotes online and even get a short explanation that lays it out. Many buyers benefit from talking to a local agent to gain a thorough understanding, especially when their beneficiaries need assistance in understanding the permanent life insurance or other policy they chose.

Read more: Low cost life insurance.