New goals, industry changes make life insurance review imperative

Now is the ideal time to have your insurance policies reviewed by a professional to determine if they are still consistent with your goals.

Just like the changes we have all experienced in our lives the last few years there have been significant changes in the life insurance industry. Therefore, now might be the ideal time for you to dust off your insurance policies and have them reviewed by a professional to determine if they are still consistent with your originally intended goals. Speaking of goals, they may have changed as well, thereby affecting how your insurance should be designed. 

In general, life insurance policies come in the form of either term (temporary coverage for a level term period of 10 years or 20 years, etc.) or permanent (lifetime coverage which includes cash value). Industry studies reveal that nearly half of these permanent life insurance policies may be in trouble due to lack of attention, poor policy management, or changes in market conditions. 

Many consumers have simply followed the lead of a friend, neighbor, or coworker when implementing their life insurance. Some have also taken the stance of “set it and forget it,” my insurance is in place so no need to review it. That position could have devastating results if your personal financial situation had changed, and you never took the time to update your insurance strategy as part of that analysis. 

Consider the situation of a young married couple who had taken out small term insurance policies, then purchased their first home and never increased their life insurance to simply cover a large mortgage in the event of a premature death. Or a high-income earner who failed to have enough life insurance to replace lost income, forcing a surviving spouse to return to the workforce. 

In addition to personal situations, there is also the business need to have the appropriate amount of life insurance in force to replace lost income as a result of the death of a key employee or, to provide the cash to satisfy the provisions of a buy/sell agreement. 

Reasons to have a life insurance review

So, what are the changes that are occurring in the life insurance industry that might cause someone to have their insurance reviewed?

  • Changes in mortality tables. Insurance companies use these tables to calculate their risk and ultimately their premiums. Factors such as increased life expectancy or advances in medical technology can have an impact on how these insurance premiums are calculated. 
  • Increase in insurance company product offerings which has expanded for the benefit of the consumer. Unlike years ago, insureds today can “be their own beneficiary” and use life insurance death benefits during their lifetime. As an example, living needs benefits on life insurance policies can be exercised should the insured be diagnosed as either terminally or chronically ill. These hybrid-type insurance policies that include the chronic illness benefits have become extremely popular for those individuals who are strategizing to insulate their assets from the grasps of the nursing home or assisted living facility.

Don’t wait to review

Given today’s evolving market, in addition to the steady potential for changes in individual circumstances, now may be a good time for an independent and objective review of your current life insurance portfolio to confirm that the right insurance is in place, for the right reason, at the right cost. 

CohnReznick Wealth Management offers this life insurance portfolio review service at no cost. Reach out to us to gain a better understanding of your insurance coverage. 

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joseph scutellaro

Joseph Scutellaro

CPA, Partner, Managing Director, CohnReznick Wealth Management

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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.