Life Insurance Policy Review: Augmenting Policies to Address a Client’s Changing Needs

Reviewing Your Client’s Existing Policy: The First Step

Before requesting a policy review meeting with your client, it is important that you go back and review their policy yourself.  If you stay in regular contact with a client, you may already be able to anticipate opportunities to tune up their coverage and maximize their investment.  A deep and intimate understanding of their existing policy is the best way to prepare your mind and train it to spot areas that need to be addressed.

While you go over their policy, keep a notepad and a list of questions that come up handy.  Is their term coming due soon?  Would it make sense to suggest converting their coverage to whole life insurance or something longer?  How have the markets affected their dividends?  With changes to our industry happening every year, perhaps there are new products you may have read about that render their current policy outdated?  In short, be prepared.

A clinical understanding of your client’s policy will not only make your job easier, but it will give you and your client confidence when you talk to them on the phone or in person.  Let’s face it, most people have enough going on in their life that once they purchase a life insurance policy, they only really think about it as they pay their premiums.  With most of the world on autopayment, some rarely consider their policy at all until a major life event forces them to get back to it.  

Brushing Up On the Latest Product Offerings

As we mentioned earlier, our industry is dynamic.  Check with the team here at Trust Financial Services to brush up on what the latest offerings are for life insurance.  Do your research.  With your client’s policy fresh in your mind it is the perfect time to dive into any new tools that may better suit their goals.  

Try to really understand these new offerings.  If you have questions, dig deeper or ask a more senior advisor for guidance.  Our team at Trust Financial is always happy to help you grasp the cutting edge opportunities in the industry.  If you are able to identify any immediate changes that may benefit your client, be sure to practice putting into words why these improvements will be better than what they have now.  

In some cases, that’s as simple as realizing that they can maintain the same level of coverage with a different instrument that may lower their out of pocket costs.  In the case that a new instrument will improve their coverage but cost them more money, being able to articulate the ‘what’ and ‘why’ to your client will be crucial to a successful policy review with them. 

Reconnecting with Your Client: Asking the Right Questions

Once you have given yourself the chance to thoroughly reacquaint yourself with your client’s current policy situation and done some exploratory research into any new products that may be useful, it is time to pick up the phone (or shoot an email) letting your client know that it is a good time to reconnect and make sure that their policy still compliments their goals and how they are living today.  Trust Financial has materials to help you explain the benefits of conducting a policy review.  Please use them to your advantage.  This is not a sales call, this is a tune-up.  It’s important that your client realize that you are focused on their well-being.  

When you chat with your client, often the friendly questions you might ask anyone reveal opportunities that would affect their coverage.  It is not much different than catching up with a friend you may not have spoken to in a few years.  Questions like: 

• How’s your job or career going?
  • Maybe they’ve been promoted, or changed course in their life.  Perhaps their income has increased/decreased etc.
• How is your family?
  • One of the most significant changes that can occur in someone’s life is the birth of a child.  A growing family naturally has major coverage considerations.
  • Perhaps an older family member has experienced health issues and the client has taken over some of the caregiving responsibilities.
• How old are your kids now?
  • Perhaps they have begun to start saving for their children’s college education.
  • Maybe their children have grown and the nest is now empty.
• How’s your wife/husband?
  • Perhaps they have separated or if they were single, perhaps they got married.
• Have there been any major changes in your life regarding your financial situation, financial responsibilities that you would want reflected in your current policy?
• How is your health?
  • This can be a very personal subject to broach but its impact on their coverage is enormous.  Changes in the status of your client’s health can lead to a rewarding conversation about new coverage options available to assist them financially in the long term. 

As you can see, many of these are pretty standard questions in any catch-up conversation.  With these answers, take note of how their current policy fits with the changes that you hear.  Then, dig deeper.

Digging Deeper and Identifying New Goals for Your Client

This may seem obvious, but it can often be overlooked.  Your client may have had many changes in their life since they first obtained life insurance through you.  Additionally, their goals financially may have changed.  Armed with the knowledge of their existing policy and the new products on the market, ask them about their financial goals in light of their current investment.

This will help you identify opportunities that are tailored to them.  

Playing the Match-maker:  Identifying New Opportunities for your Client’s Policy

Let’s look at some examples where changes could be made to your client’s policy as they go through different life events.  

• • Improved Health:  If your client has made improvements to their health since they originally purchased the policy (i.e. they quit smoking, lowered their cholesterol, lowered blood pressure, etc)  then they may be eligible for more attractive, lower-cost premiums.  Granted this will mean that they would reapply for new insurance, but in the end, the cost savings could be worth the extra hassle. 

• • New Health Needs:  In the unfortunate event that your client faces new health challenges, you can help guide them towards policies that they will be able to lean on down the road.  With Long Term Care expenses skyrocketing in recent years, additional insurance vehicles have been created to meet the financial demands of our aging population.  

• • • If your client is undergoing continued struggles with their health, or if they foresee future issues, adding coverage that can ease the financial burden on themselves and their loved ones is crucial.  The earlier this can be done, the more affordable their options will be.  One thing is certain:  The costs of long term care are prohibitive.  Explore policies that can help your client through those challenging times.
  • Changing to a New Job:  If your client was in a high-risk job when they obtained insurance but have now switched to a low-risk job.  (i.e. a skydiving instructor becomes a marketing person) then the higher premiums they paid before can be reassessed to reflect the downgraded risk.  Additionally, if they moved to a higher-paying career, then their death benefit payout may no longer be sufficient to cover their new income for their beneficiaries. 
  • Beneficiaries:  Depending on when they purchased their initial policy, the beneficiaries originally on their insurance may be drastically different today.  For example, if they were in their mid-20’s and unmarried when they obtained life insurance, they likely listed their parents as beneficiaries.  If their parents have since passed away, or if your client has started a family, it would be a good time to reflect these new beneficiaries in their policy.
    • In the case of divorce, your client may not realize that their ex-spouse is still the main beneficiary on their policy.  Depending on their relationship, they may want to take them off.

• • Their Convertible Term is Nearing Expiration:  If they are on term insurance, it may be time to purchase a new term or if they have a convertible option, to convert to whole life, universal life, or variable life insurance policy.  

• • • Term life is wonderful for the reasonable premiums and covers a period in someone’s life when their dependents aren’t yet old enough to pay for themselves.  Since most term life policies have a convertible option, knowing when to convert is dependent on your client’s financial circumstances and if they have a family, on the current financial needs of their beneficiaries.  

These are just some of the ways in which conducting a policy review can reveal new needs and new opportunities to improve the coverage options of your client.  There are many.  The general rule of thumb here is that if your client’s financial responsibilities change, then their life insurance needs should be reflective of these changes.  A new house, new debt from a loan, new dependents and more are all excellent reasons to revisit the original policy and either add additional riders, convert to a new policy, or purchase additional policies to ensure that their life insurance follows them and is able to meet their needs as they age.  

Help When You Need It

Just as life insurance is there for your client when they need it, Trust Financial Services is committed to being there for our advisors when they have questions, need guidance, and want up to date information on how to best serve their client’s needs.  

The policy review process can be very rewarding for both the advisor and the policyholder.  Our dedicated team of professionals will help you uncover the best options moving forward for your client.  Together, we can find solutions to unique circumstances that your client may be facing regarding their coverage.

Our goal is the same as yours:  Provide the best client service possible.  The end result will be insurance that ages well and clients that are covered as their lives continue to evolve.