The Kitces Report on Policy Review Featuring THEInsuranceAdvisor.COM

It is a basic principle of life insurance that in order to receive a death benefit, the policy must actually be a valid, in-force contract at the time of death. Yet, despite this absolutely crucial aspect of life insurance that if you want the death benefit, the policy must be “alive” at least as long as you are – the overwhelming focus of life insurance planning occurs at the time it is bought/sold, not in the years (or often decades) that follow.

…Different types of policies have very different contractual provisions that dictate whether and how long a policy stays in-force, and what can or cannot be done to extend the anticipated lifetime of a policy.

…It may be wise to evaluate if overall policy costs are reasonable in the first place; some publicly available tools (such as www.policypricingcalculator.com ) can help provide perspective on industry averages for policy costs as a benchmark. Planners who wish to conduct a more indepth pricing analysis regularly with clients might consider subscribing to a life insurance policy pricing and performance research service, such as www.TheInsuranceAdvisor.com (more information at info@TheInsuranceAdvisor.com). Given that not all policyowners performed a rigorous cost analysis of their prospective policy up front, there is also a real possibility that competitively priced replacement coverage could be appealing to a less-favorably-priced original policy in some cases.

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About the Author

Michael E. Kitces, MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL, CWPP™, is the Director of Research for Pinnacle Advisory Group (www.pinnacleadvisory.com), a private wealth management firm located in Columbia, Maryland. In addition, he is an active writer and speaker, and publishes The Kitces Report and his blog “Nerd’s Eye View” through his website www.kitces.com.