Maximize client value with an annual life insurance policy review

Clock December 01, 2021


Every year, millions of life insurance policyowners aged 65 and older lapse or surrender their policies for little or no value in return, despite the years of premiums they paid. An alternative for seniors—and one they are utilizing more frequently—is determining the fair market value of their policy for potential sale in a transaction known as a life settlement.

To help their senior clients understand and maximize the value of their asset, financial advisors are increasingly implementing life insurance reviews and policy valuations as part of their annual financial evaluation process . This allows advisors to stay current on their clients’ need for the policy, and to act in their best interest to reclaim some of the value of the policy if the need for coverage has changed.

A financial professional meets with clients for their annual financial plan review

Benefits of performing an annual policy review

  • Gain new insight into your clients’ priorities, including their needs for the policy, and coverage to meet their current circumstances.
  • Ensure coverage selection is both affordable and provides the necessary level of protection.
  • Validate policy performance , as well as the effectiveness of the overall insurance strategy in meeting immediate and long-term financial goals.
  • Verify policy ownership and beneficiary arrangements based on current planning objectives.

Completing the policy review

A policy review can be completed in a simple, three-step process:

  1. Discovery
    Collect basic information about your client’s current policy and any recent changes to the insured’s health. Review their immediate and long-term goals for life insurance to make sure the policy is consistent with their ongoing needs.

  2. Analysis
    Validate current premium schedules by reviewing current and past policy illustrations. If you are not familiar with, or do not have these documents, the policy carrier can assist or a life settlement provider like Lighthouse Life can help.

    Combined with information from the Discovery phase, this material will serve as the foundation for the review.

  3. Evaluation
    With the information in-hand, advisors have the insight to help the policyowner make an informed decision on the future of the policy. There are two potential outcomes of the policy review:
    • The policy is performing well and should be maintained
      If the existing policy is meeting your clients’ needs and performing competitively with the market, then maintaining coverage is appropriate. A subsequent review should take place the annually to ensure the policy is still meeting financial objectives.

    • The policy isn’t performing as expected or no longer needed—determining the fair market value should be explored

      If the review indicates that the policy is at risk of lapsing due to deviations from the original illustration, a substantial premium increase is on the horizon, or is just not meeting your client’s goals, then exploring avenues to reallocate funds is the appropriate action to take.

      To begin the conversation with your clients, use the life settlement estimate calculator below to get an estimate of the fair market value of their policies. While the calculator only provides initial estimates, it can be a good way to identify if a policy might have value in a life settlement transaction.

Try the life settlement estimate calculator today!

Like any asset in your clients’ portfolios, a life insurance policy should be reviewed on an annual basis to ensure that the coverage is appropriate and that the policy still meets financial objectives. Recommending and assisting clients with an annual review, especially when the policy is at risk of lapsing or being surrendered for little to nothing in return, is the best way a financial advisor can maximize the value of a life insurance policy for their clients.

To learn more about adding life insurance policy reviews to your annual review plan, or for tailored assistance with the process, contact us today. 


Life Settlement Estimate Calculator