is an inactive life insurance policy one that has been claimed and paid?

UPDATED: Sep 21, 2015

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

UPDATED: Sep 21, 2015Fact Checked

Free Insurance Comparison

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Asked September 21, 2015

1 Answer

It depends on the policy that you have. Policies have a coverage value, for example you can choose to buy a plan that will pay out $500,000 to a beneficiary upon your death, that you pay a monthly premium for. In addition to that coverage benefit, life insurance policies also have a cash value. Depending on if you have a whole or a term life insurance policy, you can borrow from that cash value while you are still alive.

Policies generally become inactive after a policyholder has passed away, but the money is never claimed by the beneficiary. In some cases, family members may not even know that the deceased had a life insurance policy, and life insurance companies are not legally required to tell a beneficiary if they hear a policyholder has died. So just because a policy is inactive, does not mean that it has already been claimed and paid out by the life insurance company.

In fact, there are millions of dollars in life insurance policies each year that become inactive, when the policyholder passes away, that end up unclaimed. Again, most of the time this is because the beneficiary of the policy did not know that the policy existed. Sometimes a life insurance company will attempt to find a beneficiary, but if that is unsuccessful, then the policy will become inactive and unclaimed.

The fact that the policy has gone inactive does not mean that the life insurance company gets to keep the money indefinitely. After a time, if it goes unclaimed, then the state has an unclaimed property division that takes on the responsibility for posting about the policy using online and print sources, before it eventually transfers over to the state permanently.

Answered September 22, 2015 by truss

Free Insurance Comparison

Compare quotes from the top insurance companies and save!

secured lock Secured with SHA-256 Encryption