What is a Life Insurance Audit? Most folks that have a life insurance policy typically put that policy in a file cabinet and forget about it. It is the rare person who pulls that policy out to refresh oneself on what the benefits in the policy are and is it still meeting one’s goals. When we meet with folks we review their current policies. We review the following:

  1. What life insurance company is servicing the policy? The company that originally sold you the policy may have been bought by another insurance carrier. We need to know who to communicate with in the event we need clarification/interpretation of the coverage in the policy or to file a claim.
  2. What is the death benefit amount? Is it sufficient? Is the policy primarily for final expenses, ie. funeral costs.
  3. Will the policy be in-force as long as you planned? For example; If someone purchased a universal life policy 20 years ago, it was originally illustrated with higher interest rates. Well, interest rates are at historic lows, the person is 20 years older, so the insurance is more expensive and the cash value in the policy has been used to cover the premiums. Thus the person receives a letter in the mail informing them that they need to add more premium to prevent the policy from lapsing. This comes as a surprise to the person if they have not been reviewing the policy regularly. We make sure we ask the company for an in-force illustration.
  4. Who are the beneficiaries of the policy? Are they current? Is there a primary and contingent Beneficiary? Too many times have I seen policies where the beneficiary is deceased and there is not a contingent named.
  5. Is there any cash value in the policy? This can be important for folks that need additional income or need funds to pay for long term care.
  6. Does the policy have a disability income benefit? Several years ago I met a gentleman that was disabled and he was not aware he had a disability benefit in his policy. We were able to trigger the benefit for him and receive retroactive payments.
  7. Does the policy have a long term care benefit? There are some policies that have a benefit that will cover some expense for home care, assisted living and nursing home care. This is important for us to be aware when we are doing long term care planning.
  8. Does the policy have a terminal illness benefit? If so, the benefit allows for a portion of the policy death benefit to be withdrawn in the event your doctor certifies you have 12 months or less to live.

It is human nature for folks to avoid the thought of death. However, as you can see a Life Insurance Audit can help you avoid the surprise of a lapse notice and make us aware of the benefits your policy may have to assist in retirement, long term care planning and after-life planning.