Beyond the Life Insurance Policy Review

Most successful individuals, particularly the owners of closely held businesses, professionals (doctors, attorneys, architects, etc.), own permanent life insurance contracts. The major life insurance carriers have successfully targeted these markets over the years, to the point where statistically at one time over 60% of all life insurance in this country was owned by a business entity.

The downside to this is the fact that most contract holders have a limited understanding of the cash-value life insurance they (and/or their business) own. This begs for a genuine understanding of expectation, performance, current need, and future options. In many ways, contract holders may fail to treat his/her/their life insurance as an actual “asset class”.

Consider the following:

• Any permanent policy premium that was predicated on a non-guaranteed rate of return (dividend projection, fixed-interest projection, market-rate projection) needs to be actively managed. How often? At least every five years. Many contracts ten and even twenty years of age have never been measured against the original projected performance. The math is simple: If a given contract’s premium was based on a fixed rate of return of 7%, and throughout the years the actual crediting rate has tumbled to less than half that rate, something must give, right?
  
  
• Carriers are not obligated to inform the contract holder of performance-based issues. It is up to the owner to initiate the process, typically resulting in a request for an in-force ledger – the gold standard of performance and the basis for decisions on going-forward options.
  
  
• For those policyholders whose needs for coverage have changed throughout the years, a current review is even more important. Perhaps they need LESS coverage? Perhaps, if they maintained a good insurable status, they could take advantage of reduced mortality rates? Perhaps add some form of funding for chronic care/LTC expenses? (Not an issue at age 40; but relevant at age 65).

Finally, here is a somewhat different yet impactful set of questions for those who own permanent polices – individual, business, or trusteed: When is the last time you REFINANCED your life insurance? When is the last time you had your contract stress-tested and benchmarked? The results may be quite impactful for ongoing coverage.

Life Insurance Questions?

Contact Our Life Insurance Expert

James P. Cahill, CLU

James is a 40-year veteran of the life insurance marketplace in the Greater Chicago area. His career has included a 22-year association as a branch manager and senior account executive with Hartford Life, earning top national office and top national account executive designations, while qualifying for award-conference level in 20 of those 22 years.

Our value proposition is a simple one.  Offer a thorough and cost-effective solution to business clients through careful analysis, consultation and implementation.

Contact James at info@GoCGO.com.