Demutualization is the process of converting a mutual life insurance company, which is owned by its policyholders, into a publicly traded stock company owned by shareholders, pursuant to a plan of conversion approved by policyholders and government regulators. Mutual life policyholders (and heirs) continue to be entitled to receive whatever policy benefits may be due, but in addition receive stock, cash and/or policy credits in exchange for their ownership interest in the old mutual insurance company.
The amount paid to each policyholder is based on a number of factors, including length of time the policy has been in force, face value of the policy, and total premiums paid. For many policyholders, the windfall arising from demutualization can be substantial.
By law, unclaimed demutualization compensation is remitted to the custody of a government trust account until claimants come forward. Current and former policyholders and their heirs - the majority of whom are unaware they're entitled to unclaimed stock and/or cash - should initiate a database search.