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Life Insurance News
Houston Life Insurance Company
2011-04-02
In a recent news article in the National Underwriter Life & Health magazine, the author stated, “Life insurance policy reviews are key to keeping client plan objectives on track”. The importance of policy reviews was likened to your regular medical check-up and was determined to be as critical. There are two reasons why this review is deemed vital.
First, Is The Present Policy Suitable In Terms Of The Financial And Economic Risks Of The Policy Holder?
Determine whether the policy is living up to its plan objectives. Also, check if there is a plan available at lower cost that will be a better purchase. If the policy at a lower cost is with an insurer whose financial strength is doubtful, then look elsewhere. Often there are assets in the present policy that need to be removed from the estate if tax laws have made those assets taxable. The present tax code may allow an investor’s assets to be transferred from one policy to another with no tax liability.
One very vital area that needs to be considered is whether the present owner of the policy is the correct one and are the beneficiaries also correct. This part of the review is often overlooked but is very important to consider.
The review is also necessary to determine if the policy is about to lapse and if the premiums are adequate to keep a policy active until maturity. A single-premium policy may be an answer.
Second, Is The Level Of Insurance Coverage Adequate?
Consider whether the client’s health or occupation has changed. It is also vital to look at the stability or flux in the family of the client. A baby might have been born or the client may have divorced recently.
Another event that may have occurred is an expansion of the client’s business. This could mean that additional coverage is necessary.
In Summary
Shopping is on the increase for life insurance policies because there is a lot of competition in the industry. There are product innovations being introduced and lower premiums with much higher value coming on the market. The cash value of a present policy may be adequate to purchase more coverage at a guaranteed lower premium.
Details of the review should be carefully documented by the insurer so that all the points discussed can be disclosed when necessary and all the proposals implemented to which the client agrees.
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