Your client dumps what looks like a manilla older from 1980, stuffed with life policies, illustrations and annual statements, on your desk. Scary.
Who is going to make sense out of it?
Not you! This is not your wheelhouse.
Well, your friendly CFP/CLU at 248LifeMan.com can do it, and discover if there is anything that demands attention. And he does this at no cost, because if a need for new protection is uncovered, that’s how the life insurance professional is compensated. If your business model allows it, then revenue can be shared.
Here are eight common, avoidable errors. Any of them could cost your client or his/her family a bundle.
1. Outdated beneficiaries
Often we find an ex-spouse listed, or a new spouse left out, or a trust sitting like an empty garage with nothing inside it. Unintentional disinheritance is avoidable. Ownership needs to be current as well.
2. Term policies running out or have already run out.
We see 20 year term policies with only a few years left before they terminate, in spite of an ongoing need for protection.
-Term policies still being paid for after the level period has run out, with rapidly escalating premiums. This has been likened to holding onto a rising balloon-- eventually one must let go of the rope. Then what?
3. Circumstances change—Has your client’s health improved?
Did they stop smoking or lose weight, or has a disease been cured? This can lead to huge reductions in premiums, either by petitioning the carrier to review with this new information, or in some cases, applying for a new policy.
4. Universal life and Variable policies that are falling apart.
Many policies were designed in an era of higher interest rates, or, disturbingly, sold based mostly on the agent’s perception of the client’s “premium tolerance.” The planned premiums frequently are too often not enough to allow the policy to go the distance. Many times, policies are too far gone, but sometimes they can be saved with changes to the premium structure.
5. Conversion deadlines ignored.
Sometimes term life policies are convertible to age 65, or for 10 years, or to age 70. It’s a shocker to realize that while your client needs and wants ongoing life insurance protection, they could have had it-- if only the conversion privilege had not just expired a few months ago.
6. Old life policies that have almost no reason to exist.
Estate tax law changes can make certain policies superfluous. There may also be existing policies with meaningful cash value inside them that are functionally obsolete. Often, older policies should be cashed in or sometimes they can be sold on the secondary market for more than the cash value.
7. Not enough life insurance.
Needs change, and sometimes grown children or grandchildren still have needs, or new partners or business obligations require indemnification. Clients remarry and/or have children late in life, too.
8. No provisions for income protection.
Disability insurance is a critical part of a complete life insurance audit. If your favorite client got sick or hurt, how long would their assets allow them to maintain their lifestyle?
Action step--- Contact 248-LifeMan. Let’s not miss something important.
