Help Clients Reassess Their Life Insurance Policies

What You Need to Know

  • COVID-19 has given everyone a lesson about the importance of protection.
  • Too many of your clients may still be making ex-spouses of their primary beneficiaries.
  • Plenty of other life changes could change coverage needs.

The unfortunate effects of the pandemic have led many people to increase ponder their mortality — reflected by LIMRA research indicating that 31% of Americans are now more likely to buy life insurance.

Whether your clients decided to purchase a policy within the past couple of years or did so before COVID-19 emerged, September is Life Insurance Awareness Month and offers a great opportunity to reevaluate and potentially update these documents.

I believe there are four key considerations for financial advisors when life insurance policy checkups on behalf of their clients:

1. Identify any life changes.

Significant life changes since the purchase of a policy can dramatically impact your client’s insurance needs.

have them:

  • Become a parent?
  • Had additional children?
  • Taken on a new mortgage?
  • Changed their jobs?
  • Gotten married or divorced?
  • Experienced a change in health status?
  • Become a provider/caregiver for a parent or other family member?

Changes such as these should all be evaluated to determine whether the current policy is still a good fit.

Anecdotally, I’d say about once a month, my firm discovers that a client‘s life insurance policy still designates an ex-spouse as the primary beneficiary.

Alerting a client to this situation is often greatly appreciated, not only by the client but possibly by their current spouse too.

2. Evaluate the current policy,

Even when a policy has been purchased relatively recently, many policyholders don’t have a clear idea of ​​what it entails, so I recommend taking a closer look at these details.

In addition to the beneficiary information, advisors should check whether

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