Each year, you should analyze the different insurance
policies that you own to ensure that you are paying the right premiums, your
coverage is exactly what you want, and you know what your cash value is etc.
Here is a checklist of items which should be reviewed each year.
Make a complete list of policies and actual
policies if available. You should include group plans, entity
owned coverage, trust owned (both pension trust and insurance trust) and
policies owned by other people (shareholders and/or employees).
Each policy has an anniversary
report. Universal life and Variable life carriers provide an
annual summary of all policy transactions, including increases and decreases
in cash values, and death benefits and premiums received. Whole
life carriers provide statements showing past dividends and how they are
applied to the policy. Other related correspondence from the
life insurance carriers and insurance agent/broker should be
Obtain in force illustrations for all cash
value policies. Universal life insurance policies must be
reviewed in force illustration. They show current premiums being paid and
what happens to current (non-guaranteed), and guaranteed
values. Also, you should find out the minimum premium to
provide $1 of cash value at the insured's age 100, at both current and
guaranteed assumptions. Whole life insurance policies must be
reviewed in force illustrations, which show the earliest possible year in
which the policy premiums could be offset by dividends. Also,
review illustrations which show the premiums paid in all years, and
illustrations which omit any term blend rider that may be part of the
You should have written confirmations from each
of the following Life Insurance Co.: Owner/ beneficiary, cash
value (accumulated and surrender), additional policy benefits/ riders,
loans/ interest rates, modified endowment (MEC) status, approved
underwriting class/ rating, policy split language (divorce or tax law
change on survivorship (2nd to die) plans.
Review life insurance trust documents, such as
trustee(s) confirmation, crummy letters, bank statements for the trust
checking account, tax ID numbers, shareholder agreements, split dollar and
collateral assignment documents and gift tax returns.
Review your client's financial position and
medical history. This should include their purpose of
coverage, unwanted coverage, which can be sold on the secondary market,
finance premiums from lenders and out of pocket costs.
Also check if the term insurance cost can be
lowered, or the period extended.
Check when term insurance premiums rise, and
when supplemental group term insurance costs will rise.
Convert if the client's health changed before expiration of the
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