What Happens To Old Life Insurance Policies? 
Old life insurance policies with paid up premium live until their insured or owner dies , then they pay out a death benefit to the beneficiary . If an old policy if allowed to lapse for non payment , one of two things happen . A term policy is lapsed and cancelled immediatelybecause as term suggests it was `` rented '' until payment is complete . On a cash value plan such as whole life oruniversal life , the cash value pays the premiums until they are exhausted and it too will lapse and cancel . 