How do I monitor and evaluate an in-force life insurance policy?

There are many components that can affect the performance of a life insurance policy. The key in monitoring and evaluating a life insurance policy is determining how and if these components have changed and are affecting its performance. There are differences if you are monitoring a policy purchased recently and monitoring (or evaluating) an older policy. I will make that distinction where it is possible.

Life insurance is an asset that must be purchased and monitored with care. Consider the following areas – where attention to detail can add value for the beneficiaries and prevent trouble in the future. The focus is on existing policies, however, many of these items also apply to new policies.

Face amount — every two to three years, you should review your term life insurance needs.

Policy type (discussed in Chapter 2, Questions 4 through 19) — such as whether the policy is term, whole life, universal life, variable life, etc.

Riders — are they still needed?

Free Life Insurance Annual Review Guide Packets Can Be Downloaded From Here

The following is a summary that I prepare annually for each client to ensure that all information is updated and the owner and/or trustee is fully informed. The summaries are based on information provided by the insurance carriers. It does not cover every potential issue; it is designed for policy owners to have the basics of their policy and it is always used in conjunction with the carrier’s most recent annual statement and the following guide. Not all of the categories are applicable in every instance. This may be useful to you in reviewing some of the more important factors of your policy.

Life Insurance Policy Information To Review (as applicable):

  • Insured
  • Carrier
  • Policy Number
  • Type of Coverage
  • Face Amount
  • Cash Accumulation Value
  • Cash Surrender Value
  • Policy Loan
  • Issue Date
  • Premium Mode
  • Modal Premium
  • Premium (if switched to Annually)
  • Annualized Current Premium
  • Annual Savings if Switched to Annual
  • Re-entry Date
  • Last Conversion Date
  • Primary Beneficiary
  • Contingent Beneficiary
  • Owner
  • Riders
  • Notes/Comments
  • Outstanding Items

The following is a guide to the terms used above. Other terms specific to your term policy may be found in the Glossary.

Type of Coverage: This is the type of term life insurance coverage insuring your life.

Face Amount: This is the amount your beneficiaries would receive in the event of your death (less any policy loans outstanding).

Premium: This is your premium and how it is paid.

Issue Date: The date your policy became effective and was issued by the insurance company.

Re-entry Year: If applicable, this is the year that you will need to re-qualify for preferred rates. Please read your policy for further information or contact my office.

Last Conversion Year: This is the last year that you can convert your term life insurance to permanent life insurance without evidence of insurability.

Primary Beneficiary: This is the primary person who would receive benefits.

Contingent Beneficiary: If applicable, this is your contingent (or secondary) beneficiary who would receive the proceeds of your policy should your primary beneficiary predecease you.

Riders: If applicable, what riders you have elected on this policy.