The Importance of Life Insurance Policy Reviews

Life Insurance

When was the last time you reviewed your existing life insurance policy? I often get calls from clients requesting a comparison of their life insurance policy or a policy review. Often, I find that many people have not looked at their policies since they purchased them and really don’t know how the policy is performing and how it may perform in the future.

For example, I recently received a call from a person who purchased a Universal Life policy several years ago. They had received a letter from the life insurance carrier requesting a substantial amount of money to keep the policy in-force with an in-force illustration showing a substantially increased premium going forward.

What would cause something like this to happen? There are many reasons why some life insurance products may require increased premiums in the future, as they may be products without guaranteed premium terms. A person would be presented an illustration of the product at the time of a purchase with a planned premium requirement based on current interest rate and cost of insurance projections along with the guaranteed interest rate and cost of insurance projections. There is typically a large disparity between the current projections and the guaranteed projections.  Interest rates can fluctuate frequently effecting the policy positively or negatively as the years go by.  Regularly reviewing your policy can help you keep a handle on these long term effects.

Helpful information to review regularly:

Annual statements - these will provide valuable information such as projected policy continuation dates based various conditions.

In-force illustrations - you can receive these from the insurance carrier based on the following scenarios:

  • As Is – the illustration will provide a projection of the performance of the policy based on the current planned premium amount.
  • Premium Search - to continue the policy to the maturity date or the age of your choice.

Taking action by reviewing annual statements and requesting in-force illustrations periodically from your carrier will prepare you for future expectations with your life insurance policy.

About the author:  Ken Buccico holds a LUTC designation and has been in the life insurance business for 39 years. His wealth of experience empowers clients to make best possible decision regarding a life insurance policy. To explore the best  life insurance option, contact Ken at 1-800-651-1953 or KBuccico@Pivot.com.