Life insurance

Life insurance is a contract between the insured, or owner, and a life insurance company. The owner pays a stipulated premium to the insurance company. If the insured dies while the policy is inforce a death benefit is paid to the beneficiary. Some policies accumulate cash value which is available by loan or upon surrender to the owner. Also, some policies have accelerated death benefits which may be available if the insured is expected to die within six months to a year.

Determining family life insurance needs

This worksheet assumes that both spouses are working and will continue to work if one partner dies prematurely. Replacing 100% of your income may be a good starting place. This should leave the survivor with the same standard of living. Some expenses go down when one partner dies but other expenses, such as childcare, usually go up.

Family Life Insurance Needs Analysis

	Spouse #1 Dies	Spouse #2 Dies
A. Income Need for Family
Annual Income Needed	$___________________	$___________________
- Social Security/Fixed Benefit	___________________	___________________
= Income Shortage ÷ Assumed Interest Rate	___________________	___________________
= Amount of Capital Needed	___________________	___________________
+ B. Last Expense Fund	___________________	___________________
+ C. Emergency Fund (3 to 6 months income)	___________________	___________________
+ D. Education Fund	___________________	___________________
= E. Total dollars needed	___________________	___________________
- F. Present Insurance/Assets	___________________	___________________
= G. New Insurance Needed	$___________________	$___________________

Locating a lost policy

If you’ve lost a loved one, determining if a life insurance exists, or obtaining the details of an existing policy, may be difficult. Here are a few suggestions:

• Search personal records: Look through files, safe deposit boxes and other areas where your loved one might have kept insurance documents.
  • If the policy is not evident, try to find the name of the life insurance company that issued the policy. For clues, go through bank and credit card statements to look for evidence of premium payments made to an insurance company.
• Contact financial advisors: Present or prior attorneys, accountants, investment advisors, bankers, business insurance agents/brokers and other financial professionals might have information about the deceased’s life insurance policies.
• Check with employers: Contact the employee benefits administrators of your relative's former employers to see if any group life insurance policies are still in effect or if your loved one purchased additional voluntary coverage at work.
• Check the mail: Look for premium notices or dividend notices. If a policy has been paid up, there will no notice of premium payments due; however, the company may still send an annual notice regarding the status of the policy or notice of a dividend.
• Review income tax returns: Life insurance companies pay interest on accumulations on permanent policies and charge interest on policy loans.

Insurance companies will assist you to locate a lost policy. All you need is the name of the insurer that issued the policy; from there you can contact the insurer to start a claim, even if you don’t know the policy number. A list of policy locators is in the section below.

If you are unsure a policy exists, or you don’t know the name of the insurance company, the NAIC (National Association of Insurance Commissioners) provides a free policy locator that will place inquiries with participating companies. Start here: Life Insurance Policy Locator Service

Insurance companies are obligated to find policy beneficiaries. If no beneficiaries are found, they are required by law to turn unclaimed funds over to the state (called "escheatment").

The unclaimed funds are turned over into your state's unclaimed property division. Insurance companies turn policy proceeds over to these divisions when they know the insured person has died but can't find the beneficiary. The National Association of Unclaimed Property Administrators website provides links to unclaimed property divisions in each state. See: Search for your unclaimed property

Lost policy finders

Below are several life insurance company policy location services:

• Brighthouse Financial: Life Insurance Policy Locator. Uses the NAIC policy locator.
• New York Life: Search for a lost policy or benefits
• Northwestern Mutual Life: Locate a lost policy (call)
• MetLife: Policy Finder
• Nationwide: Search for a lost life insurance policy or annuity contract
• StateFarm: Life Policy Finder

See also

• Insurance

External links

• term4sale.com Term Life Insurance Quotes (unbiased -- without entering any personal information)
• How To Buy Life Insurance by The Finance Buff
• The Life Insurance Course, a comprehensive free online life insurance course from MyCEisOnline.com. This course is intended as continuing education for insurance agents.
  • The Glossary provides definitions for: Cash value life insurance, Limited Payment Life Insurance, Survivorship life insurance, Term Insurance, Universal Life Insurance, Variable Life Insurance, Variable Universal Life Insurance, and Whole life insurance. (Thus demonstrating the complexity of these products.)
• Unclaimed life insurance benefits 5 reasons your life insurance benefits might go unclaimed, Insurance Information Institute, Inc., viewed January 28, 2020.

Papers

• Insuring America: Market, Intermediated, and Government Risk Management Since 1790 by Wright, Robert E., (November 5, 2007)
• How Much Life Insurance Do You Need? by Glenn S. Daily (2000)
• How and When to Purchase Low-Cost Term Life Insurance by Peter Katt (1998)
• Human Capital, Asset Allocation, and Life Insurance by Ibbotson, Roger G., Chen, Peng, Milevsky, M.A. and Zhu, Xingnong (2005). A fuller version of this paper is also available.
• The Adequacy of Life Insurance by Gokhale, Jagadeesh and Kotlikoff, Laurence J., (July 2002). TIAA-CREF Institute, Working Paper No. RD72
• Life Insurance Coverage: How Much Is The Right Amount? by Claude C. Lilly, University of North Carolina at Charlotte and TIAA-CREF Institute Fellow, March 15, 2006

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