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Life Insurance Policy Reviews: A Checklist for Advisors

Writer's picture: coreincomemarketingcoreincomemarketing

Staying proactive with life insurance policy reviews is vital to ensuring your clients’ financial plans remain on track. Regular reviews—at least annually—help advisors identify opportunities to adjust coverage, qualify for better rates, or address gaps that may no longer align with clients’ needs.


If you haven’t already contacted your clients about reviewing their policies, now is the time! Conducting these reviews not only provides value to your clients but also demonstrates your commitment to protecting their financial future.


Annual policy reviews can cover a lot of ground, which is why Core is here to help. Send us your client’s insurance statement, and we’ll assess key factors like cash value and death benefit to ensure their policy reflects their current life circumstances and financial objectives. Call our team at 800.541.7713 or email us at info@coreincome.com to start the process today.


Table of Contents


The Importance of Regular Life Insurance Policy Reviews

Someone holds a document called Life Insurance Policy to review their current plan and holds coffee in their right hand

A life insurance policy review is an opportunity for financial advisors to evaluate an existing policy’s suitability, coverage, and alignment with the policyholder’s financial goals and needs.


These reviews involve analyzing the policy’s terms, benefits, premiums, and overall performance to ensure it remains relevant to the client’s evolving circumstances.


Conducting these reviews annually is essential for three key reasons:


(1) Life Insurance Policies are Either Assets or Liabilities

A life insurance policy is an asset if it performs as intended, but it becomes a liability if premiums increase over time or the policy’s future is uncertain.


A policy is an asset when:

  • The correct amount of premium is being paid

  • It's not at risk of lapsing

  • It's designed to sustain its intended benefits without unexpected complications


However, it turns into a liability when it becomes unpredictable. If premium payments keep rising over time due to poor policy design, the client can face larger, unexpected payments to keep the policy in force and potentially become unaffordable.


This uncertainty can jeopardize the policy's value and strain the client’s financial resources.


Regular reviews ensure the policy remains a reliable asset rather than an unpredictable liability. If the policy isn’t performing as expected, advisors can recommend adjustments to ensure it better aligns with the client’s financial goals.


(2) Client Objectives May Have Changed Since Time of Purchase

Major life events such as divorce, the birth of children, or shifts in financial responsibilities can significantly impact a client’s life insurance needs.


A policy review ensures the current coverage reflects the client’s present situation and provides adequate protection for their loved ones.


(3) Premium Dollars Could Be Allocated More Effectively

With premium payments being a significant consideration for policyholders, a policy review allows advisors to assess whether the premium structure is still affordable and reasonable for their clients.


Advisors can also explore ways to optimize costs by adjusting coverage or considering alternative policy options, freeing up funds for other priorities within the client’s financial plan.


Consequences of Not Conducting Annual Reviews

A couple discussing their financial plan with their financial advisor on a couch in their home

Premium Dollars Could Be Allocated More Effectively

Life insurance policies purchased years ago can become outdated or even lapse without the client’s knowledge.


Recent retirees often overlook their employer-sponsored life insurance, which often lapse as soon as they leave the company.


Additionally, many universal life policies have undergone changes to their mortality and expense charges, which can reduce the policy’s coverage duration.


A policy that was originally projected to last until age 92 might now be set to lapse at age 85. If the client’s policy is projected to lapse sooner than their life expectancy, it’s crucial to address the issue immediately.


The Policy May Be Based on Outdated Assumptions

Many life insurance policies are built on assumptions that were relevant at the time of purchase but no longer apply in the current financial environment.


For instance, a policy’s performance can be negatively impacted by assumptions related to interest rates or mortality costs that no longer align with reality.


When these assumptions prove inaccurate, the policy's performance can differ significantly from the original projections, resulting in a mismatch between the policyholder's needs and their actual coverage.


The Client May Be Investing In an Ineffective Policy

Without regular reviews, clients may continue to funnel money into a policy that no longer serves their best interests.


Annual policy reviews help identify gaps or weaknesses in coverage, allowing advisors to recommend changes, such as adding riders, increasing coverage, or switching to a more suitable policy to address the client’s specific needs.


A Competing Advisor May Step In

If you’re not conducting proactive reviews with your clients, there’s a good chance a competing advisor will. Clients may seek assistance from another advisor, especially if they feel their current advisor isn't staying on top of their life insurance needs.


By neglecting policy reviews, you risk losing the opportunity to address your client’s concerns and reinforce your role as their trusted advisor.


Key Areas to Focus On During a Policy Review to Ensure Sufficient Coverage

The hands of two financial advisors discussing a client's financial plan, holding paper depicting charts and graphs

Advisors should always conduct life insurance policy reviews when their clients anticipate a life change. However, it's generally advisable for advisors to check in with clients at least annually.


As the time approaches to conduct a client’s annual policy review, engage the Core Income team for assistance. Send us your client’s statement, and we’ll evaluate their current policies to ensure they're still meeting their financial needs and goals.


To prepare for a review, it’s important to gather all relevant policy documents, with the in-force ledger being the most crucial.


An in-force ledger provides a snapshot of the active policy’s status, detailing key information such as premiums, cash value, and policy performance. This document allows advisors to evaluate the current policy’s effectiveness and make informed decisions about potential adjustments.


During a policy review, the following elements should be thoroughly examined to ensure the policy still meets the client’s needs:


(1) Does the Current Policy Provide a Certain Length of Guarantee Based on the Premium Provided?

Assessing the policy’s longevity and whether it will provide coverage for the intended duration is essential. If the policy is likely to expire sooner than expected, discussing options for extending or replacing the coverage is crucial before gaps occur.


(2) Is the Policy in Jeopardy of Lapsing?

A life insurance policy can lapse if premium payments are missed, causing a loss of coverage and potentially devastating consequences for the insured and their beneficiaries.


If a policy lapses, several issues may arise:


  • Difficulty with Reinstatement: Many insurers allow for reinstatement, but it often comes with conditions such as proving insurability and paying overdue premiums with interest.


  • Loss of Death Benefit: If the policyholder passes away after the policy lapses, the beneficiaries will not receive the death benefit.


  • Higher Premiums: Reinstating a policy or purchasing a new one can result in increased premiums due to age or health changes.


It’s important to act quickly if a policy lapses—contacting the insurer and submitting a reinstatement application can help restore coverage. For assistance, Core can guide financial advisors through this process.


(3) Does the Policy Meet the Client's Objectives?

Over time, a client’s life circumstances may change, prompting a reevaluation of their life insurance needs. Major life events cause life insurance needs to evolve over time.


Based on their life changes, clients may be interested in increasing their death benefit, optimizing cash value growth, or adjusting premium payments.


Life insurance policies with built-in cash value can serve as a tool for clients for multiple purposes, such as funding their retirement or children’s college fund, and it’s important to assess whether the policy still aligns with those goals.


Additionally, advances in medicine and technology have significantly improved life expectancy and the quality of life for individuals with chronic conditions. Many of these individuals may now qualify for more favorable rates, making now an opportune time to explore new or updated policy options.


(4) Are There Updates to the Beneficiaries?

Another crucial part of a policy review is ensuring that beneficiary designations are up to date and aligned with the client’s wishes.


The beneficiary review also opens the door to a discussion about estate planning considerations to ensure a smooth transfer of assets to the intended beneficiaries.


How Core Income Can Help

Financial advisors frequently turn to Core for assistance with policy reviews, relying on us to analyze their clients’ statements and explore the most suitable policy options.


If your clients choose to change their current coverage, Core streamlines the process by handling the necessary paperwork and coordinating directly with the insurance company on your behalf.


By leveraging Core’s expertise to conduct thorough policy reviews, you ensure that your clients receive the most mathematically optimal coverage for their evolving needs. This proactive approach not only boosts your clients' confidence but also strengthens your ongoing relationships through expert guidance and support.


Call us anytime at 800-541-7713 or email us at info@coreincome.com to get started.


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Core Income is an FMO, IMO, and independent insurance brokerage dedicated to serving financial advisors, their staff, and their clients.


Our mission is to help advisors deliver financial certainty by supporting them through actuarial precision, elite responsiveness, and collaborative partnerships.


To learn more about how we can support you, schedule a consultation with our team or call us at 800.541.7713.


Stay connected with us on social media for more tips and insights on annuities, life insurance, and long-term care.


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