Your clients’ life insurance policies may no longer serve their interests and be in need of a
review and audit. If the policy owner or trustee of the policy doesn’t have the knowledge
needed, an In Force Illustration helps to ensure their needs are met now and into the future.
Consider these reasons to have your client’s policies reviewed:
• Policies may not be performing as projected due to market downturns, decreasing
interest rates, and market volatility.
• Newer products might be more cost-efficient or offer better guarantees (lower
premium for same coverage or more coverage for same premium).
• Guaranteed Death Benefit Universal Life is a new type of life insurance product that
can often provide the same guaranteed death benefit as Whole Life at a lower cost.
• Insurer financial ratings changes put policies at risk if the backing company is at risk.
• Company financials may have changed; A buy-out based on the valuation of the
company will need to be evaluated for an increase in the company value, otherwise
any buy-sell agreement may be invalid.
• Actuarial tables change periodically, and pricing is better with new products.
• Policy was sold in a vacuum without competition.
• Policies may be at risk of lapsing, leaving the trust beneficiaries with nothing and you
with potentially a major liability for failing to properly monitor the policies.
• Underwriting changes may have occurred.
• What was once considered rated for underwriting purposes might be standard today
and cost less.
• Improved health or lifestyle changes may have occurred, providing the potential for
better underwriting offers and lower premiums.
• The amount of life insurance needed might now be larger, making current coverage
insufficient. Or, conversely, the need for the payout may be much lower than when
the policy was first secured.
• Policy may no longer be needed and a better value for the client may be derived by
selling it in the secondary market.
A policy review is part of an ongoing assessment of trust-owned life insurance. We can help
you to analyze existing life insurance policies owned by the trust to determine if it is
appropriate for the needs of the trust beneficiaries and whether the type and performance
of the life insurance are aligned with the trust’s goals.
There are significant issues that need to be considered before replacing life insurance such
as, but not limited to: commissions, fees, expenses, surrender charges, premiums, and new
contestability period. There may also be unfavorable tax consequences caused by
surrendering an existing policy, such as a potential tax on outstanding policy loans.
We have the resources to help you:
• Examine a trust’s current coverage and offer unbiased comments
• Compare the current coverage to the trust’s anticipated needs
• Compare the current coverage to a newer, alternative policy
• Offer cash flow solutions that enable the purchase and maintenance of life insurance
Case Study #1
Trust-holding fixed insurance products
Charlie and Stella set up their estate plan 10 years ago. As part of the plan, they set up an
irrevocable trust and the trustee purchased two second-to-die policies on their lives from
two different companies. One was a participating Whole Life contract, and the other was a
Universal Life contract. The couple diligently made gifts for premium payments each year,
and the trust worked well. However, nobody – including the trustee – had reviewed the life
At the urging of their life insurance advisor and their CPA, Charlie and Stella contacted the
trustee and asked to have the policies reviewed. As it turned out, both policies were not
performing as expected. Both were sold to them using assumptions that, while reasonable
for the economic climate 10 years ago, were unrealistically high in today’s environment. The
Universal Life policy was being credited a rate 550 basis points lower than the illustration on
which the policy was sold. A 1035 exchange of the two policies into a single lifetime
guaranteed second-to-die policy with an increased death benefit where premiums would
only be due for the originally scheduled number of years.
Case Study #2
Estate increased substantially
John and Sarah did their estate planning 15 years ago. Back then, it was determined that
they had an estate liquidity need of $5 million. As a result, they established an irrevocable
trust and had the trust purchase $5 million of second-to-die coverage on their lives. Since
their original estate planning, their estate increased in value by $10 million. As a result of a
policy review, it was discovered that the amount of their existing trust-owned life insurance
was not enough to provide the estate liquidity they desired. Using Financing, John and Sarah
were able to purchase the $10 million in death benefit without increasing their
There are many other factors that may trigger the need for a review. To get started today, contact Brian George at (360) 340-0601, or by email at email@example.com.
Advisory services are offered through Planning Network Partners, LLC, an Investment
Advisor in the State of Washington.