You may have life insurance and think you’re adequately covered. Yet, time and time again, people purchase life insurance and never review it with a critical eye. Insurance companies generally don’t contact policyholders with news that they may, in fact, be able to purchase less expensive coverage and potentially avoid problems with their policy in the future.
Reviewing your existing life insurance program is vitally important, to you and your loved ones. That’s where a forensic life insurance audit and analysis conducted by a qualified and experienced insurance specialist comes in. A forensic life insurance audit is a detailed analysis of your current coverage and comprehensive investigation of alternative solutions—all taking into account your unique situation and requirements.
Potential benefits of undertaking a forensic life insurance audit and analysis:
- Achieving premium savings and/or additional coverage at a similar cost
- Extending life insurance policies that expire too soon
- Realizing tax savings through alternative insurance ownership techniques
- Rescuing policies that are not fully guaranteed and subject to failure
- Uncovering gaps in coverage due to lack of coordination
- Leveraging gifting strategies to enhance legacy planning
A forensic life insurance audit and analysis may yield a recommendation to refinance a life insurance policy. Potential benefits of this include:
- More coverage for the same premiums
- Lower premiums for the same coverage
- Greater guarantees of coverage and premiums
- Reduced exposure of your family’s financial security to the stock market
Reviews Cover the Full Scope of Coverage Types
Forensic life insurance audit and analyses can be implemented for all five primary categories of life insurance—term life, variable life, universal life, indexed universal life, and whole life. In each case, opportunities exist to optimize coverage and savings. Consider:
Term life insurance: The cost of insurance has decreased in recent years. This presents an opportunity to save on current premiums. Often, clients can extend the fixed period of increased coverage for the same outlay.
Variable life insurance: It’s critical to ensure that variable life insurance contracts are performing adequately based upon the values of the investment sub-accounts. Account reallocation or increased premiums may be required.
Universal life insurance: These policies are interest rate-sensitive, and the present low interest rate environment has affected existing policies. Projections often demonstrate that policy owners may need to pay additional premium dollars or face losing their coverage at a time in life when it may not be affordable to buy anew. A forensic life insurance audit and analysis by a qualified and independent insurance specialist can identify issues like these and attempt to resolve them through alternative solutions.
Indexed universal life: These policies are index-sensitive, meaning they are tied to financial indices such as the S&P 500, Hang Seng and others. It can offer potentially higher cash values and permanent death benefits.
Whole life insurance: Many whole life policies require several years of additional payments before the policyholder can stop paying premiums due to lower dividend rates. Although these policies ultimately are often purchased for their cash value growth, policyholders often find less need for the cash and view the policy as an inheritance for their heirs. Sometimes, leveraging the cash value for a higher death benefit is the optimal solution. A forensic life insurance audit and analysis can yield the best way to go, given a policyholder’s unique circumstances.
Understanding the Forensic Life Insurance Audit and Analysis Process and Deliverables
At American Business, our insurance professionals utilize a four-step process to undertake a forensic life insurance audit and analysis:
Step 1: Organize
- The professionals at American Business obtain an authorization letter to send to carriers.
- We collect policy data from the insured and/or advisors.
- We then enter all policy data into a questionnaire filtered template.
Step 2: Assess
- We conduct a thorough performance analysis that quantifies the relationship between cash values, interest rates, dividend rates and expenses.
- We also perform an underwriting assessment that accounts for variables and policy classifications, as well as health/lifestyle changes.
- We evaluate carrier ratings and relative financial strengths.
Step 3: Report
- We provide clients with an updated summary of policies.
- We include observations, insights and comments within each policy summary.
- We also highlight areas of further discussion that can help to fine-tune the optimal client solution.
Step 4: Follow-Up
- Finally, our professional insurance advisors can coordinate development and deployment of solutions.