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Schulfer & Associates, LLC

Your Life Insurance Policies: Worth a Review


When is the last time you’ve reviewed your life insurance policies?  For most people, they have a good understanding of their coverage as well as the features and benefits of their policy when they initially put the contract in place.  Thereafter, it’s clear what the death benefit is and of course, the life insurance company will always make sure that you understand the premium due!  Other important details of your policy may not be so obvious but are worthy of review.


If your policy is term it is pretty straight forward.  Your premium is guaranteed for a specified amount of time, a “term”, for a specified amount of money payable upon proof of your death.  Although this is considered generally the simplest of contracts, there are a few opportunities that could be significant with term insurance.  Has your health or have your habits improved since the contract was issued?  Examples would be weight loss, no longer using tobacco or engaging in high-risk activities, or a change for the better in a chronic illness such as diabetes.  Ask the company what their criteria is for an improved rating.  I’ve helped clients through this process with some policies resulting in a reduction of their premiums for the remaining life of the policy.  Is the policy convertible to permanent insurance?  If you convert, how would the premiums compare to other permanent policies?


Permanent policies have many moving parts.  If cash value is building as a result of your overfunding of the policy or from the return that you’ve achieved within the policy, how do you plan to put that money to use?  Can you use the death benefit for long term care coverage?  Most older policies are not flexible in that manner, however, some newer policies are.  Some companies will allow you a multiple of the death benefit to be used for various types of long term care or can even provide lifetime long term care coverage.  Several of my clients have found a transfer of the cash value from their old policies to a new policy to be the best use of their accumulated dollars.  The new policy could be a paid-up contract (no more premiums due) or one that allows flexible use of the death benefit.  While the old policy was the best fit for them at the time the contract was issued, their needs have changed and fortunately, their options have changed as well.


Most importantly, understand your guarantees.  I recently helped two new clients save their coverage from lapsing.  Each client had policies that should have been designed to provide permanent coverage, however, the agents who sold them did not make sure that the premiums were set at a sufficient level to guarantee death benefit through life expectancy.  One gentleman’s policy was scheduled to lapse at age 59, after having paid into the policy for 30 years.  My other client had a policy that was only three years old:  on both a guaranteed and non-guaranteed basis, the policy was shown to lapse in year eight!  Your annual statement should disclose your guarantees, however, for the best projections, call the company and request an in-force illustration.


Someday, and who knows when, the money from those policies will be needed by your loved ones.  Make the most of what you have.  Your life insurance policies are worth a review.


By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®


Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.