Readers Question:

Hi! I’m Louie from Hamden Connecticut and I just want to know what would happen to cash value when a policy holder dies.

Louie

Hamden, CT

Hi there Louie!

Thanks for the question there. To first answer your question, you should know that the policy holder isn’t entitled to the cash value of the policy that he holds. The cash value belongs to the insurance company in Connecticut , and this is used to pay beneficiary claims, should the policy holder die.

Now, if the policy holder chooses to relieve the life insurance company of obligations in terms of paying the claim through cancellation or lapsing of the policy – that’s a different story. Since insurance company doesn’t need the cash value anymore – they’ll give it to the policy holder. This is under the policy’s clause called “non – forfeiture”.

Okay to make things easier look at it this way. When the policy holder dies – he’s dead, and he can’t cash the check. The next thing is, it’s the policy’s cash value, not his. To become more enlightened, you can speak to your local insurance company.

Check too whether you are overpaying or not for your life insurance by taking advantage of features of websites like this one which can give you free quotes online.

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