Life Insurance Policy Audits
Changes in your life, changes in the economy, and changes in the life insurance industry all make a difference in the amount and type of life insurance that makes sense for you, your family, and your business.Due to the difficult economic conditions facing our economy, life insurance companies have been especially hard hit. Mutual policies (those that declare dividends) are experiencing reduced dividend scales. Policies that were projected to have future premiums paid by dividends are requiring those premiums to be paid for a much longer period of years. In addition polices that have had premiums stop are now requiring payments once again.
Universal Life policies (those that depend on interest crediting) are facing the same challenges. Premiums are required for longer periods of time. Many universal policies that were purchased several years ago, unlike policies available today, do not have death benefit guaranties. This lack of guarantees along with lower interest rates means that the coverage is more likely to expire much earlier than anticipated.
Every life insurance policy that was purchased five years ago or longer should be reviewed. An “In force” ledger should be gathered. This ledger will give the insured a current “snap shot” of how the policy will perform (how much needs to be paid in premiums) so that it will be there when it is needed.
Economic conditions change the amount required to solve the problems posed by your death. For example, the amount of investable assets needed to replace your income and support your family may be dramatically affected by changes in interest rates and market returns.
Our firm audits policies for our clients. In the 8 plus years that we have been doing this, we have recommended several changes. These changes resulted in coverage that in now guaranteed to be there when needed.