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Life Insurance Policy Review

When was the last time you reviewed your existing life insurance policies?  If you are like most, it is possible that you haven’t looked at them since they were purchased.

On a term policy, it can be as simple as reviewing the annual premium cost and the length of time that this will continue.  On whole life policies, the things to look at besides the obvious death benefit, ownership and beneficiaries, include cash surrender value, outstanding loan terms and asset allocation if the policy is a variable life contract.  If there is a new policy that better suits the current and future needs, you can generally exchange the existing policy for a new policy on a tax free basis using IRS code Section 1035.
 
Your policies should be reviewed every few years or anytime there is a life event in your family.  If you are a trustee of an irrevocable life insurance trust ("ILIT"), you have a fiduciary obligation to review the policy owned by the ILIT and be proactive in either maintaining or replacing those policies.
 

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