3 Reasons Your Client Needs A Policy Review

By Robbin Smith

One lesson the pandemic has taught us is the prudence of policy review. Mortality is now front of mind for clients and they have understandable concerns about their insurability.

Not only are people working from home, but also they are working on their homes, going through closets and cabinets, and getting their affairs in order. Life insurance is part of this process and has become of increased importance for some people. On top of that, the marketplace continues to see change as carriers are repricing their products according to current conditions.

Many insurers are using expedited underwriting, with no paramed exam, for certain ages and amounts. The process can be virtual from start to finish, which allows financial professionals to connect with and help clients during this remote working environment.

Three Main Reasons For A Policy Review

1. Needs may have changed. Clients’ financial goals and objectives change over time. Financial professionals will assess the current needs when evaluating the policy and provide alternatives that may be more appropriate for their current situation.
2. Improved mortality. People are living longer, and mortality costs have come down over time. Carriers had to reprice their products in 2009 and in 2019 to reflect mortality experience. Depending on when your clients purchased a policy, they could be spending more than they need for the coverage amount.
3. Economic changes. Market returns and long-term interest rates dictate how a cash value policy is funded when initially purchased. In addition, the actual returns experienced determine how the policy actually performs. Sometimes, the discrepancy between the assumed returns and actual returns can drastically affect the cash values, premiums and death benefit. Getting current, in-force ledgers periodically helps keep the policy on track to be there when needed.

Possible Solutions

1. Same death benefit for less premium or eliminate the premiums.
2. More death benefit or cash value for the same premium.
3. Enhanced benefits with stronger guarantees or adding a long-term care component.
4. Save policy from lapsing with a better priced product.
5. Affirm the policy is meeting the client’s current financial and risk management needs, and there is nothing the client needs to do. This helps strengthen your relationship with the client.

Four Ways To Find Policy Review Opportunities

1. Personal financial statements. Make sure you are reviewing all your clients’ and prospects’ PFSs. All life insurance policies should be listed.
2. Life insurance statements. As you are collecting data for financial plans, make sure to get the most recent statements of any life insurance clients’ own.
3. Business financial information. You can find cash value of life insurance on the corporate balance sheet as an asset or term premiums will show under the liabilities section. Either way, review all their clients’ insurance.
4. Just ask! This is still the easiest way to find an insurance review opportunity. Offer a complimentary review to all of your clients.

Suggested Talking Points

Introduce the topic

“As your financial advisor, it is important to me that we make sure that your life insurance is still meeting your current needs and is performing as it was originally intended. There are many reasons why policies may not perform as expected, and it is important to do a comprehensive review every five to seven years. During this stay-at-home period, it is a good time to pull out your most recent life insurance statements and let us take a look.”

Discuss the sample process

“There is one form that you will need to sign that will allow us to request an in-force ledger (proposal) from your current insurance carrier. We will do all of the work behind the scenes and get back to you with a complimentary review of your current plans.”

Review the potential outcomes

“Many times, we can save you money or give you more coverage for the same premium. Sometimes we help with policies that are in danger of lapsing and other times we can reposition to a product with a long-term care component. Finally, there are times that we can conclude that the policy is doing great and is still meeting your current needs. In that case, it gives you confidence in knowing that it will be there for your family when you need it.”

Incorporating policy reviews as a part of your overall practice and a permanent agenda item for your client meetings can add value in multiple ways.

Robbin Smith is business development specialist for Truist Life Insurance Services. Robbin may be contacted at [email protected].

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