Annual Review of Life Insurance Checklist

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 included.

• 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 policy.

• 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 (2^nd 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 conversion period.