Life insurance policy mystery lingers

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Dear Dr. Don,
My wife and I recently found an old life insurance certificate for her great grandfather that was never cashed in. The gold seal is still on it, and it was a paid-up policy. How can I find out if it has any value?
— Barry Beneficiary

Dear Barry,
The certificate with its intact gold seal doesn’t mean much when it comes to determining whether the policy has been paid out. Your first step should be to contact the company. If the company no longer exists, you may be able to find out if it was merged or acquired by another firm by taking the actions suggested by the American Council of Life Insurers on its Web site.

Two sources of information can assist you in finding the life insurance company that currently services your policy:

  • The state insurance department of the state in which the insured person resided at the time he or she bought the insurance policy.
  • Best’s Insurance Reports, available in the reference section of many larger libraries. This annual update lists insurance company names and addresses, as well as insurers’ name changes, mergers and other changes.

Once you find the company, it will be up to the company to show the benefit has been paid — if it has been paid. If a benefit payment is still due, it would have to be traced through the estate of the named beneficiary. If the named beneficiary predeceased the insured, the pathway would be through the estate of the contingent beneficiary.

An insurance company that went bankrupt may still pay policy benefits from a guarantee association or guaranty fund. This is discussed in more depth in the National Organization of Life & Health Insurance Guaranty Association’s article “What Happens When an Insurance Company Fails.”

If the company went bankrupt, the guarantee accounts are still open and the death benefit has not been paid, there could be a settlement. On the other hand, if the guarantee accounts for that company have been closed, there will be no help from that avenue.

Good luck with your attempts to find out if the insurance certificate has any value, and whether that value extends to your wife. Drop me a note to let me know how things pan out.

Note: I’d like to thank Edward Graves — associate professor of insurance and the Charles J. Zimmerman chair in life insurance education at The American College in Bryn Mawr, Pa. — for his insight in helping me answer this reader’s question.

Read more Dr. Don columns for additional personal finance advice.