When someone dies, most of what they owned announces itself. The brokerage firm keeps mailing statements. The retirement plan custodian sends the distribution forms. The county has a record of the deed, and the bank will tell the executor what is in the checking account once the paperwork is in order. Settling an estate is mostly a matter of gathering things that are already asking to be gathered.
A life insurance policy often does none of that. A policy that became fully paid up years ago sends no bills. A policy bought in 1990 may now sit with a carrier that has since been acquired and renamed. If the insured never mentioned it and the only copy is in a box in a closet, the asset can sit there, fully paid for, while the rest of the estate is settled around it.
This happens more often than most families would guess. Since it launched in November 2016, the National Association of Insurance Commissioners’ Life Insurance Policy Locator has matched consumers with nearly $17 billion in life insurance and annuity benefits across more than 780,000 matches, as of July 31, 2026. More than $3 billion of that was located in the most recent twelve months. Those figures count only the policies someone thought to look for.
Our two recent split dollar pieces ended on the same point. An arrangement that is right on the day it is signed can still fail years later because nobody kept track of it. This month we want to explain why our work is organized around that point. We treat a life insurance policy as an asset in a family’s plan, and nearly everything we do follows from taking that seriously.
Where We Start
A family rarely needs a policy for its own sake. It needs a business to survive a generation, an estate that can pay its own taxes without a forced sale, a spouse who can stay in the house, or children whose inheritances come out the way their parents intended. The policy is how some of those outcomes get funded, and it is only as good as its fit with them.
That is why, since the firm was founded in 1987, our work has started from the same principle: planning first, product second. Our part is the insurance side of the plan, including sizing coverage to the actual need, selecting the carrier and the policy, reviewing policies already in force, and keeping coverage aligned with the plan it serves. Legal drafting, tax analysis, and investment management belong to the family’s attorney, CPA, and investment advisor. So before we talk about a carrier or a design, we want to understand what the family’s attorney has drafted, what the CPA is projecting, what the investment advisor is managing, and what the insurance is supposed to accomplish inside all of that. Sometimes the answer is a new policy. Sometimes it is a smaller one, a change to an existing one, or no change at all.
Starting there changes what we pay attention to afterward. If a policy is one asset among several in a plan that other professionals are also managing, then it has to be measured in terms they can use, held in a way that matches their documents, and maintained for as long as the plan depends on it.
Life Insurance as an Asset
The working definition we use has five parts. An asset has a value that can be measured. It has an owner, and the ownership is documented. It costs something to hold, and that cost can be weighed against what it is expected to return. It needs periodic review, because the conditions around it change. And somebody besides the person who acquired it knows that it exists.
Families apply that standard almost without thinking to their investment accounts and their real estate. Permanent life insurance usually meets the first four tests on paper and, in our experience, often fails the fifth in practice. It is purchased in a meeting, filed away, and paid for by automatic draft, and it can stay in force for decades without anyone asking what it is worth or what it is for.
A review we described in an earlier piece shows what applying the standard looks like. A high-net-worth client held a mix of whole life and term coverage. Reviewing the coverage as a whole raised three questions. The term policies carried conversion privileges, which could let the client obtain permanent coverage within the contracts’ terms, generally without new medical underwriting on the insured. The client had also chosen carriers that permit conversion into survivorship coverage, a less common provision that comes with its own conditions, often including qualification of the second insured. Knowing those options and their deadlines mattered as the estate plan evolved. The existing permanent policies carried loan provisions ranging from 5% to 8%, which mattered because a loan balance accrues interest, reduces the death benefit, and can cause a policy to lapse if it outgrows the cash value supporting it. And the question underneath all of it was what each policy was actually returning relative to what it cost to keep.
That last question is where the internal rate of return comes in. The IRR on a death benefit is the annual rate of return implied by the premiums going in and the benefit coming out. The premiums do not literally accumulate at that rate inside the policy; the figure simply measures the relationship between the two sets of cash flows. It is the same measure an analyst would apply to any investment’s cash flows, which is exactly why it is useful: it puts a policy in terms the family’s CPA and investment advisor already work with. The figure depends heavily on timing, which is why it is more useful to look at several possible ages than to quote a single return. For a hypothetical 60-year-old paying a level $40,000 annual premium for a $2,000,000 death benefit, the IRR is about 14.0% if the benefit is paid at 75, about 5.0% at 85, and about 1.9% at 95.*
Two qualifications keep the measure honest. A death benefit is generally received free of federal income tax, subject to exceptions, so in most cases the figure is already an after-tax number. But on many policies the premium and the benefit depend on non-guaranteed assumptions about crediting rates, dividends, or the cost of insurance, so the return illustrated at issue is a projection, and the same policy reviewed fifteen years later may show something quite different. We are also careful about one comparison. It is tempting to set a policy’s IRR beside the yield on a bond, and the industry has leaned on that comparison more than it should. A bond pays on a schedule, while a death benefit pays on a date nobody knows. We use IRR to compare one policy against another, to compare a policy against a family’s realistic alternatives for the same need, and to show when a policy already in force has drifted from what was planned.
When the Asset Is Neglected
The policies families fail to find are rarely exotic. They are ordinary policies that stopped generating paper, and for years the system made the problem worse. Many insurers used the Social Security Administration’s Death Master File to identify annuity owners who had died so that payments could stop, without using the same data to identify deceased policyholders whose beneficiaries were owed benefits. A multistate regulatory investigation and a series of settlements beginning in the early 2010s changed that practice, and many states now require insurers to compare their records against death data. That has helped, but a carrier still has to find the beneficiary, and proceeds that go unclaimed long enough are eventually turned over to the state as unclaimed property.
What the statistics cannot show is what a lost policy costs a family, and it is usually more than the money. Consider a father who plans carefully for two children. His son has lived in the family home for years and will inherit it. To keep things even, the father buys a policy naming his daughter as beneficiary, and he tells his son, but not his daughter, because the subject never comes up. The policy is paid up by 2009 and sends nothing after that. When he dies at 84, his daughter settles the estate as executor, and she does it believing her father left her brother the house and left her considerably less. That belief shapes the next three years between them. Then, clearing out a storage unit, she finds a 1994 statement, a search locates the policy at a carrier that has been acquired twice since, and the benefit is paid.**
The policy did everything its contract required. It failed at the one thing it was bought to do, which was to let two children grieve their father without wondering whether he had treated them fairly. No design choice would have fixed that. A single conversation, or a single page left with the will, would have.
For a family that suspects a policy exists, the NAIC Life Insurance Policy Locator is a free and confidential place to start. A beneficiary or legal representative submits a request, participating insurers search their records, and if there is a match and the requester is the beneficiary or has legal authority, the insurer makes contact directly. If there is no match, there is no response, and searches can take 90 business days or more. Bank statements showing payments to an insurer, old tax records, a former employer’s benefits office, and the state unclaimed property database are each worth checking as well.
Why the Work Continues
If a policy is an asset in a plan, the work does not end when the carrier issues it. The principles we hold to at the beginning of an engagement are the same ones that govern the years after it, and each of them shows up most clearly in how we treat a policy already in force.
Independence is what lets us review an existing policy without assuming it should be replaced. Replacing a policy creates new compensation for whoever places the new one, along with new costs, a new contestability period, and an insured who is older than on the day the original was issued. A recommendation to replace should therefore be carried by the numbers, and in our experience the numbers often say the right move is to keep the policy, adjust its funding, or simply correct its paperwork.
Selectivity is why carrier strength remains a live question for the life of the policy. A policy designed to pay in thirty or forty years is only as sound as the insurer’s ability to pay in thirty or forty years. We recommend only carriers with a Comdex score of at least 90. The Comdex is not a rating of its own; it averages the percentile rank a carrier receives from each major rating agency that rates it. Because ratings change, we keep watching them on policies already in force.
Collaboration is why ownership, beneficiaries, and projected values have to stay aligned with everyone else’s work. The owner of a policy controls it, and the ownership structure can determine whether the death benefit is included in the insured’s taxable estate. The beneficiary designation on file with the carrier generally governs who receives the proceeds, regardless of what the will says, and designations that name a former spouse, a trust that has since been restated, or the insured’s estate can send money somewhere the plan never intended. Those details live partly in our files and partly in the attorney’s, and they are only right when somebody checks them against each other.
And documentation is why we close an engagement by making sure someone besides the insured knows what exists. A single page for each policy, listing the carrier, the policy number, the owner, the insured, the beneficiaries, the face amount, where the contract is kept, and who to call, belongs with the will and the trust documents. It costs almost nothing and it answers the question the daughter in our illustration should never have had to ask.
The Reason It Was Bought
A plan can record the face amount, the owner, and the beneficiary in perfect order and still leave the reason behind it unwritten, which leaves the family to guess. A policy reaches its purpose when the people it was meant for know it exists and understand why it was there. Everything we have described here, from the first planning meeting to the review fifteen years later, is in service of that, and it is why we do the work.
* Hypothetical. Assumes level premiums paid at the start of each year and the death benefit paid at the end of the year of death. Does not represent any actual policy or product.
** The facts above are a hypothetical illustration and do not describe any actual family or policy.
| Summit Legacy works with families and their advisors on the insurance side of the plan: sizing coverage to the actual need, carrier and policy selection, in-force review of policies already in place, and keeping coverage aligned with the plan it serves. If you have policies that have not been reviewed in several years, or you are not certain your family knows what you own, we would welcome the conversation. |
IMPORTANT DISCLOSURES
The information provided in this article is for general informational purposes only and does not constitute legal, tax, financial, or investment advice, a solicitation, or a specific recommendation. The internal rate of return illustration is hypothetical, is based on assumed premium amounts, benefit amounts, and timing, does not reflect any actual policy, product, carrier, or client, and is provided solely to demonstrate the concept; actual results will vary. The family scenario is a hypothetical illustration, provided solely to demonstrate the concepts discussed, and does not describe any actual client, family, or policy. The client review described is summarized in general terms and is not representative of any other client’s circumstances. Policy premiums, cash values, and death benefits may depend on non-guaranteed elements that can change. Term conversion privileges, including any right to convert into survivorship coverage, vary by policy and carrier and are subject to the terms, conditions, and time limits of the contract. Policy loans and withdrawals reduce cash value and death benefit, may cause a policy to lapse, and may have tax consequences. Replacing an existing policy may involve new surrender charges, a new contestability period, and other costs, and should be evaluated carefully. Death benefits are generally excluded from federal income tax under IRC Section 101(a), subject to exceptions, including certain transfers for value and certain employer-owned contracts; estate tax treatment depends on policy ownership and other facts. Guarantees are based on the claims-paying ability of the issuing insurer. Third-party ratings, rankings, and composite scores such as the Comdex reflect the opinions of the rating organizations, are subject to change, and are not guarantees of future financial strength or performance. NAIC Life Insurance Policy Locator figures are as of July 31, 2026, as reported by the NAIC on September 3, 2026. Life insurance products involve costs, risks, and material considerations that vary by individual circumstance. Consult a qualified estate planning attorney, tax advisor, and financial professional before making decisions about any policy. Securities offered through Integrity Alliance, LLC, Member SIPC. Integrity Wealth is a marketing name for Integrity Alliance, LLC. Summit Legacy is not affiliated with Integrity Wealth.
