Policy review: Make sure your clients’ life insurance is still working for them

Change is inevitable. Our clients’ lives are constantly changing, and as their financial professionals, we recognize that their financial needs and goals also change. By regularly reviewing their portfolios, we help to ensure that their asset mix matches where they currently are in life and where they plan to go. However, one vital component of their overall plan often gets overlooked in that review process — and that component is insurance.

For clients who have engaged in life insurance planning, the resulting policy often gives them the confidence and reassurance that their current needs and concerns will be addressed by the death benefit the policy provides. But life insurance planning is not a one-time solution — just like a client’s  overall portfolio, their policies should be reviewed as their needs change over time. Especially for clients who have a major life event, reviewing their policies can provide an opportunity to make sure that their insurance still matches their goals. Major life events might include:

• Marriage
• Birth of a child or grandchild.
• Death of a family member.
• Retirement or change in employment.
• Caring for an aging or ill family member.

Any one of these events can warrant a need for changes to clients’ life insurance coverage. For example, clients who purchased policies for income replacement in the early days of their career might not need as much coverage once they retire. Or, if they have amassed a sizeable estate, they may need more life insurance to plan for estate transfer expenses, including estate taxes.

In addition to changes in their planning needs, life insurance carriers often develop innovative and dynamic product changes that are attractive to clients but were not available when they first purchased their policy.

Carriers often modify their policy pricing as well. Consider a client who purchased a life insurance policy 20 years ago before long-term care riders were commonly available. Twenty years later, the prospect of a health event requiring significant care might be at the forefront of that client’s mind. By reviewing the old policy and comparing it with newer policies that incorporate critical care or long-term care riders, financial professionals can help that client plan for both lifetime and death coverage with one policy, often for a premium similar to or even lower than the original policy.

Starting a policy review is simple — ask your clients for a copy of a recent insurance ledger and set a time to review their current goals. By working with a financial professional, clients can determine if their current needs still match their existing coverage. Then, compare that policy to the products available today - can the clients get a death benefit that better suits their needs now? Can they pay less premium or get new features that are a better fit for their plans?

The value added for clients by reinforcing the appropriateness of their coverage or finding them a better alternative addresses their life changes and reinforces your relationship with them as their comprehensive source for financial guidance. Life insurance reviews also give you the chance to build relationships with the beneficiaries who might look to you for assistance once the policy pays benefits to them.

Change may be inevitable, but by addressing the shift in goals that comes with change, we can help our clients be prepared to live their lives, knowing their goals can be met with your guidance along the way.

Carma McCallie, JD, is vice president, advanced sales, with Crump Life Insurance Services. Carma may be contacted at [email protected].

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