Maintenance

It is crucial that as a consumer you understand that maintaining a life insurance policy doesn’t stop at the time of purchase.  Like your overall financial strategy – your life insurance philosophy must be dynamic. As your goals change, so should your coverage.

Tread Lightly includes the “Eight Biggest Risks to Policy Maintenance”, our “In-Force Ledger Request Guide” and an “Irrevocable Life Insurance Trust Guide” to get you started on the path of having many years of successful coverage.

 

Do you know for certain that your policy is adequately funded and meeting your objectives to achieve our definition of success? To ensure that your life insurance is properly funded and is actively meeting your financial goals, we have developed the following guidelines to maintain your insurance portfolio.

 

 

Retain the Final Sales Illustration

 

Retain the final illustration that was presented during the purchase or delivery of your policy. It should be an exact match to the policy declaration page. Make sure all riders listed are part of that illustration. If you do not have original final illustration of your purchase, request it from the agent and/or carrier. The carrier likely based the issuance of your policy on that final illustration.

 

 

Update Ratings

 

Carriers’ financial status changes frequently, so it is important to assess the ongoing financial quality of your carrier at least every two years. Make sure that assessment is based on the actual carrier that issued your policy and is not based solely on the parent company.

 

 

In-force Ledgers Request Guide

 

Request an in-force ledger from the existing insurance company at least every two years. What you ask for depends on the policy purchased. The variations are:

 

 

Term Policy Ledger Request

 

Request an in-force ledger projecting future premiums as well as the terms of the conversion option.

Whole Life Policy Ledger Request

Request an in-force ledger at least every two years based on the current dividend-crediting rate and 1 percent below the current dividend-crediting rate. Inquire as to what their current dividend-crediting rate is based on and when it could be expected to change.

Request a written explanation regarding their dividend-crediting strategy. Also request a disclosure on what the insurance company’s current return is on its general account. Compare in-force illustrations to original projections. Consider the current crediting rate as compared to general account return and further request thecarrier’screditing philosophy.

If the current crediting rate is above the general account return, ask the carrier how that is achieved.

 

 

Universal Life Policy Ledger Request

 

            Request an in-force ledger every two years based on the current crediting rate and 1 percent below. You should also request a disclosure on what the insurance company’s current return is on its general account.

Compare the in-force ledger to its original projection. If the policy is projected to lapse before age one hundred (earlier or later, if you choose), ask what premium increase would be necessary to keep the policy in-force until that time. Ask if there has been a mortality cost or expense change in the past year and if so, what the amount was. If there is a no-lapse provision in the policy, inquire if it is current or how much would need to be paid to bring it current.

If the current crediting rate is above the general account return, ask the carrier how that is achieved.

 

 

Variable Life Policy Ledger Request

 

Request an in-force ledger at least every two years based on an assumed rate of return that you expect the subaccounts to produce. Ask for a second illustration at 2 percent below that rate.

Compare in-force ledgers to original projections. If the policy is projected to lapse prior to age one hundred (earlier or later, if you choose), ask what premium increase is necessary to keep policy in-force until that time. Ask for a listing of how the cash values are invested and in which subaccounts. Consider that allocation and whether it is currently applicable.

Ask for a list of all subaccounts available along with a fund expense disclosure and historical returns. Consider reallocating funds periodically due to current circumstances. Monitor the subaccount allocations regularly.

Ask if there has been a mortality cost or expense change in the past year and if so, what the amount was.

 

 

Indexed Universal Life Ledger Request

 

Request an in-force ledger at least every two years based on the current crediting rate and 1 percent below. Inquire as to their general account current return. Compare the in-force ledger to its original projection. If the policy is projected to lapse before age one hundred (earlier or later, if you choose), ask what premium increase would be necessary to keep the policy in-force until that time.

Request a summary of which indexed funds the cash value is allocated toward. Request a list of other available indexed funds along with historical returns and consider the allocation of those funds periodically due to current circumstances.

Ask if there has been a mortality cost or expense change in the past year and if so, what was the amount. If there is a no-lapse provision in the policy, inquire if it is current or how much would need to be paid to bring it current.

 

Biannual Requests

 

At least every two years, no matter what type of insurance you own, you should request from the carrier:

 

  • Owner of the policy
  • Beneficiary of the policy
  • Address of record of owner

 

The agent that sold you the policy should be willing to provide this information to you every two years with no effort on your part. If you do not get this commitment from the agent, consider changing the agent of record on the policy to someone that will commit to providing this information on your behalf for the duration of your policy ownership.

 

Visit www.TreadLightlyGuide.com/inforce for copies of these checklists and download whichever documents pertain to the policy you own. We have also provided sample in-force ledger request letters to make your request for this information easier to carry out.

 

 

 


 

UA-48749164-1