Integrate Insurance Policy Review in Financial Planning Process
Posted 7-7-2010 | By Katie Haskins | Download Article
Many people know the importance of periodically reviewing and monitoring investment portfolios based on changes to the market, personal situations and products. However, many overlook the importance of applying this same practice to their life insurance policy.
During this turbulent economic environment, the insurance industry has undergone significant changes resulting in a more efficient and competitive marketplace for insurance products. In addition, interest rates have reached historic lows which may affect the performance expectations of existing life insurance policies. These factors should alert individuals to review existing policies as well as consider purchasing new policies to meet their insurance goals.
Insurance policy reviews should be part of your overall financial planning process. If the insurance policy is held by an irrevocable trust, it is the trustee's fiduciary responsibility to understand the health of the trust's assets. A policy review gives the trustee the information necessary to make educated decisions. If the life insurance policy is held by an irrevocable trust, you should provide the name and phone number of the trustee to your tax advisor.
I recently met with Jay Cavanagh from The KNW Group, an independent financial and insurance services firm, for a Q&A about policy reviews.
Describe what takes place in a policy review?
A policy review involves an examination of the past and projected future performance of the life insurance policy. It also is an examination of your current and future life insurance needs.
How do people determine the right time for a review?
A policy review should be completed periodically to ensure that your existing life insurance policy continues to meet your circumstances and objectives. Following are a few questions to ask when considering a policy review:
- Will my existing life insurance policy provide adequate coverage?
- Am I on track to meet my intended goals?
- Do I know if my insurance products are competitive and cost-effective in today’s market?
- Have the needs that prompted the purchase of my existing life insurance policy changed?
What information is needed for a policy review?
You will need to provide information on your current contracts, including group benefits information; copies of personally-owned contracts; and possibly in-force ledgers on existing contracts which you may need to obtain from your insurance company.
By having your life insurance policies reviewed, you will gain a better understanding of the performance of your existing life insurance policies. You also will become more educated on the available insurance products that today's insurance climate offers.
For more information, please contact Katie Haskins, CPA, MBT, at 651-407-5883 or khaskins@hlbtr.com.