By Jon L. Ten Haagen
If you have a specific need, would you go to a generalist or a specialist who works on your specific needs? As with, say, medicine, the same is true with insurance. You don’t want to go to an agent who can only offer you the insurance an employer markets.
No, you want to go to an independent insurance agent who can shop the market for the coverage and services you need.
Choose carefully. After all, it is your life we are talking about!
Life changes, and so does life insurance. Life insurance has changed dramatically in the last decade.
Insurance companies have created new products that reflect lower costs of insurance because people are living longer.
They have also become better at underwriting many medical conditions, equating to lower costs and more options for risk-impaired individuals.
Furthermore, changing interest rates and other factors have dramatically impacted the industry.
Therefore, policies that are over six years old should be reviewed to ensure that they are performing adequately based on a person’s needs.
Did you know that 62 percent of life insurance policy holders don’t know what they own or how it works?
What’s happening in your life? Although you should review your insurance policies regularly, certain life events may alter your coverage needs even more. Births, deaths, marriages, career changes, divorces, home ownership & estate creation, or losses and gains in personal wealth are all reasons to analyze your current policies.
And then what? A policy review is not necessarily a precursor to purchasing a new policy. You may find your current coverage is performing effectively and meeting your needs.
If not, your financial advisor will help you find the best alternatives to change aspects of your current policy such as premium payments or death benefit amount or to completely replace it.
Here’s how it works. A proper life insurance review has multiple components: Death benefit amounts and needs assessment.
Premium and performance evaluation to ensure your current policy is performing cost efficiently.
Ownership and beneficiary designations to certify that the policy is set up correctly and will be properly maintained to meet all goals.
With a basic life insurance needs analysis, they can determine the right amount of insurance and the most suitable product to meet all your needs. They also have the ability to do a more detailed analysis of your estate or business to make certain that you are taking full advantage of what life insurance can do for you!
A case study provided by Affiliated Advisors Inc.: Improved coverage coupled with cost savings. An affluent business owner needed a $1 million of buy-sell coverage to replace a 10-year expiring term policy. Due to health reasons, most insurance carriers declined to offer coverage.
However, with leveraging our underwriting expertise, a new 10-year term policy was issued with a highly sub-standard rating.
Two years later, the case was taken back to market. A replacement policy was issued, with a significantly lower sub-standard rating, resulting in an annual cost savings of 17 percent and extended coverage by two years.
Set up your life insurance policy review and appraisal done now!
As always, we welcome your comments and questions.