Life Insurance Policy Review
When was the last time you reviewed your clients’ policies? Are you certain that their life insurance policies are performing as expected? Is it still suitable for them?
Think about how 10 years ago, the ability to procure additional protection through riders such as chronic illness, disability or long-term care were not readily available! If that’s not enough, remember that significant adverse estate tax consequences may be triggered by incorrect ownership if not properly addressed. A simple ownership mistake can do that?! You bet.
The performance of a life insurance policy is constantly fluctuating based on expense projections and earnings of the issuing insurer. Here are some key factors to consider:
- Health changes: a shortened life expectancy may mean checking if a client may be able to suspend premium payments entirely. On the flipside, very healthy clients may need to increase premiums to ensure policy lives as long as they do!
- Longer life expectancies discount: super preferred and/or preferred classes discount may not have existed when the original policy was issued.
- Missed or late payments: could decrease performance projections and may eat into the policy cash values or even require additional premiums to prevent policy lapse.
- Insurance company expense: some insurers pass expense savings to policyholders while others don’t.
- Investment yields: interest rate environment impacts performance projections. With low investment yields, dividends or interest rates credited to the policy decreases causing increased premium amount and/or frequency. Original policy design may be jeopardized.
Sometimes it is best to re-engineer a policy to keep it on track. Sometimes it is worth looking into new products, features or pricing that resulted from insurers’ competition and consolidation. At the end of the day, why leave your clients’ financial security to chance?
Call or email me to discuss this important topic. I would love to hear from you.