POLICY AUDIT ANALYSIS

We believe one of the most valuable resources and services we provide is an audit and analysis of existing life policies.  Over the last decade, we have seen the consistent lowering of fixed interest rates and the repricing of life products. A proper in-depth analysis can help our clients gauge if they are still on track, if there are any issues or “red flags”, and/or are these policy(s) still competitive in this environment.  In particular, this exercise is extremely prudent for trustees of existing life insurance trusts due to the fiduciary standards and the importance of doing their due diligence.  We thought some examples would best highlight the benefit.

SUMMARY OF 

POLICY AUDIT ANALYSIS OF EXISTING IN-FORCE LIFE POLICIES:

The policy audit is a “win-win” value proposition to the insured and/or the trustee.  It can create piece of mind that the current policy(s) is the right one or that it can be significantly improved upon.  It can highlight future issues or concerns and offer a variety of options.  It is almost always an extremely useful exercise.

EXAMPLES OF

POLICY AUDIT ANALYSIS:

CASE #1

Client had purchased a Second-to-Die Joint Life policy over twenty years ago with a major mutual company. The policy was purchased when the unified credit was at $1,000,000 each ($2,000,000 joint) but with today’s current credit above $11,000,000 each (over $22,000,000 joint), the client no longer had estate tax exposure or liquidity needs.

 

Under original projections, the policy premiums were designed to vanish in Year 15 (no more premiums due) but with the decrease of dividend crediting rates (and type of policy) premium were now due for lifetime.  The client was spending $35,000/year for $5 million of coverage.  We were able to exchange the policy for a $4.5 million fully paid-up/fully guaranteed policy with no further premiums due.

DOWNLOAD OUR CHECKLIST ON 

POLICY AUDIT ANALYSIS

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Policy Audits can be daunting work.  You can use this checklist to make sure you don't skip a step and provide the most value to your client.

Click here to download the checklist

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VALUE OF A POLICY AUDIT ANALYSIS