The importance of biannual life insurance reviews; I believe it is critically important if insurance agents want to do whatever they can to improve on the dismal percentage of polices which actually payoff at death, that they begin doing reviews on existing polices at least every two years. By dismal, I have heard that up to 90% of polices issued do not last until maturity. A complete review including getting a variety of in-force ledgers showing different assumptions to be able to track if the polices sold are performing as expected. Not the “annual review” of just looking at the statements which the carriers send out on an annual basis which are not totally descriptive of what is happening and include a lot of opaque information, impossible for the clients to discern, and difficult for even experienced agents to fully understand the potential consequences for the clients.
For example, by obtaining three different sets of illustrations recently, I was able to save my client $25,000 annually on two separate polices that were performing ahead of expectations (a very pleasant surprise) and one major problem with the third company, Transamerica, which may have unilaterally increased the mortality costs for my client almost 700%.
Without getting these three sets of ledgers, I would not have been in a position to help my client not only save a lot of money, but prevent a disaster from happening with his Transamerica policy.
Client advocacy should be at the heart of all we do. Isn’t it better to retain clients we have fought to acquire, and serve their interests to the best of our ability?
One issue is that over 70% of the policies out there are what is called “orphan policies” and the agent who sold the policy is no longer in the business. Other problems arise because certain companies try to keep a stranglehold on their policies and their captive agents from replacing them where appropriate by offering huge incentives to these agents to keep these policies on the books.
Let’s create more transparency for the clients and do our best to make sure that the insurance which was paid for will be in force when the family needs the benefits.
With the sustained previous seven years of low-interest rate environment and low bond performance which is a major investment component of insurance carriers, many carriers have been scrambling to “serve their shareholders” at the expense of their policyholders and raise mortality costs, lower interest crediting rates, and other assorted mechanisms to increase the probability of lapsed policies or simply attempt to become more profitable.
The best defense is an active offense on behalf of policyholders to carefully scrutinize how their policies are performing on a consistent biannual basis.