Unlocking Financial Security: The Art of Annual Insurance Policy Reviews

Unlocking the door to financial security begins with understanding the necessity of regular life insurance. What are the reasons why so many have neglected this crucial practice; with millions of consumers who have purchased life insurance policies, but so often unaware of the potential risks (and potential rewards) that lie within.

Covr’s platform and team make it easy to conduct a policy review and provide an in-depth review of your clients’ policies.

In the constantly evolving landscape of personal finance, securing one’s wealth through life insurance policies is more than a transaction; it’s a dynamic strategy. This article explores the often-overlooked practice of annual policy reviews and its pivotal role in adapting to life’s twists and turns.

Explore the multifaceted aspects uncovered during the policy review process, from outdated policies to shifting life goals. Let’s review the layers of considerations Covr can provide to an advisor and their clients, in a comprehensive review.

When conducting a comprehensive policy review, there are several key items that should be thoroughly examined:

Client’s Goals Assessment:

  • Deepen your relationships with your clients by evaluating the alignment of existing policies with the current and future financial goals of the client. Many clients purchase life insurance for its core purpose, to protect the financial future of loved ones in the event of an untimely death.
  • Discuss with your clients the reason they originally purchased the policy. Then, have a discussion with your client about their goals, fears and concerns to see if the policy is still aligned.  Perhaps today they are more concerned about the risk of a health care event, estate/wealth transfer or charitable planning.
  • Adjustments may be made to their existing policy to help with alignment to today’s goals. Or, a new contract may be able to better align with future goals.

Impact of Life Events:

  • Consider major life events such as marriage, divorce, the birth of children, retirement, or other significant changes.
  • Assess how these events may influence the effectiveness of current insurance policies and plan accordingly.
  • Do they have enough coverage? Too much coverage? The right type of insurance?  Who owns the policy? Who are the beneficiaries?

Premium Assessment:

  • Review existing policies to determine if the current premium remains suitable for the client’s financial situation.
  • Address any changes in premium requirements, ensuring the policy remains sustainable and in line with the client’s budget.

Policy Performance Analysis:

  • An in-force illustration will help evaluate the health of the existing contract.
  • If the current contract is fixed, the interest rate credited to the policy is likely to have been reduced since originally purchased.  This can have a negative effect on the policy’s performance in the future.
  • If the current contract is variable, volatility in the stock market may have affected the future health of the contract.
  • Have all premiums been paid on time?  Have any loans been taken out?  All actions that may affect the future health of the contract. 
  • An in-force illustration, obtained by Covr, will assess the health of the existing contract.

Carrier Financial Strength Evaluation:

  • Evaluate the financial strength and stability of the insurance carrier.
  • Ensure that the chosen carrier remains robust and capable of fulfilling its obligations over the policy’s duration.

Product and Coverage Evaluation:

  • Inform clients about new insurance products and coverage options that may have emerged since their initial policy purchase.
  • Explore how these new offerings could enhance or better suit the client’s needs compared to their existing policies.
  • In the event a new policy could put the client into a solution that aligns with today’s goals and their future goals, there are still considerations.  The client would need to be underwritten for any new policy. New contestability and suicide clauses would be in effect with a new policy.
  • The IRS tax code 1035 does allow the owner to roll the cash value from an existing life contract to a new life contract and it would not be a taxable event, even if there is gain in the existing contract.

By thoroughly examining these items during a policy review, individuals can ensure that their insurance strategies remain up to date, adaptable, and aligned with their evolving financial needs.

Offer practical solutions for policies not meeting their illustrated expectations, empowering clients to take informed action. Explore options such as restructuring, additional funding, policy replacement, or surrender.

Without a policy review your clients may not have the coverage and performance they are expecting or requiring for their loved ones. With Covr’s Policy Review process, now is the time to encourage a proactive approach to ensure insurance policies remain effective in safeguarding wealth through life’s inevitable changes.

Covr’s team will track down any in-force illustrations.  All we need is a request form signed by the owner of the existing policy.  Covr’s team will then analyze and summarize the health of the existing contracts.  The team will review the client’s current goals and then review the marketplace to ensure that the client has the solution that aligns with their current and future goals.  Covr’s team then provides point of sale support by presenting the analysis and any options to you and your client. Conducting a thorough policy review will help your clients make sure they have the coverage they need.

Contact us today to start a policy review for your clients.

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