Wednesday, February 01, 2017

Guidelines for When to Review Your Client’s Life Insurance

By Matt Kaas, Life Marketing Consultant

Most clients tend to think of their life insurance policies as a “set it and forget it” part of their financial plan. Thinking that you never have to review your existing coverage or re-evaluate your needs is one of the largest misconceptions about life insurance. Ideally you would review your client’s life insurance policies with them annually, but when that is not an option, here are some general life changes that you can use as guidelines for when to review your client’s life insurance coverage.

Their income changed or they got a new job. If your client changed jobs, or got a big promotion and their income increased, do they still have enough life insurance coverage in order to replace the loss of the new income if something were to happen? Conversely, if your client has lost their job, maybe they are now over-insured and can reduce their coverage in order to make their premiums more affordable.

Their health changed. Let’s say your client has been exercising regularly and made efforts to improve the quality of their diet, and as a result have improved their blood pressure or cholesterol. Or your client had a medical condition like a recent bout with cancer or a heart attack. With continued routine examinations and favorable follow-up from the date of onset, your client could be eligible for a rate reduction that can significantly decrease their premiums or even make them eligible for coverage.

Their financial obligations have changed. Are your clients expecting a child? It can be an enormous expense providing for a child and it is extremely important to have enough life insurance coverage to not only provide for the remaining spouse, but also the children if something were to happen to your client. Perhaps your clients have recently become empty-nesters and no longer require as much insurance coverage as their children have moved out of the house. Another example would be if your clients recently bought a house or paid off a mortgage. Mainly, any significant change in the amount of liability on your clients’ balance sheet is a reason to evaluate your clients’ life insurance need and increase, decrease, or secure coverage appropriately.

Their marital status has changed. Just like with having a child, getting married oftentimes represents a reason to increase the amount of insurance coverage on your client, as now there is an additional person dependent on your client’s life. Conversely, if your client has recently gotten divorced it can be a reason to evaluate whether or not as much insurance coverage is necessary, and potentially reduce the amount of insurance inforce. I saved this guideline for last for a reason: I cannot stress how important it is to review your clients’ beneficiaries after they have a divorce. While it would seem obvious, failure to review beneficiaries can often leave your ex-spouse or their children with an unintended chunk of change when your client passes and potentially leave out new dependents or family members.

Ultimately, life insurance is an important part of any financial strategy and should be reviewed accordingly. For more information on the importance of client reviews or for sales material that will help with the review process, please give me a call at 800.321.3924.

Matt Kaas | Life Marketing Consultant
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x133 | Dir: 734.786.6133

Please note that Ann Arbor Annuity Exchange and its representatives do not give legal or tax advice. Encourage your clients to consult their tax advisor or attorney.

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