Securing Tomorrow: A Comprehensive Guide to Life Insurance Review and Optimization

Raymond Bell |

As 2023 draws to a close and 2024 approaches, reflection on the passing year prompts us to prioritize what truly matters, especially our loved ones. Safeguarding those we care about is paramount, and Life Insurance plays a crucial role in this protection.

Despite its significance, a 2020 LIMRA study reveals that only 54% of Americans possess life insurance, and merely 27% hold non-portable group life insurance from their workplace. Addressing the issue of underinsurance is essential, yet it's just one facet of the broader conversation on protection.

Many individuals obtain life insurance but often file away the policy, neglecting regular reviews. Whether purchased online or through an agent, the coverage may remain unexamined. Life evolves rapidly, and the protection needs from five or ten years ago may no longer align. Questions arise: Is the original policy still suitable? Can existing coverage be enhanced? Is the policy aligning with its initial purpose? These questions form the foundation of a crucial Life Insurance protection dialogue.

The past year ushered in various life changes—marriages, divorces, births, financial shifts, wealth accumulation, and unfortunately, deaths. These factors dictate the required amount and duration of life insurance coverage. It's probable that a policy purchased years ago may no longer provide adequate coverage or for the right duration. Have life changes affected the relevance of current beneficiary designations?

Premium amounts hinge on three factors: age, smoker status, and rate class. While age inexorably rises, the latter two factors can change. Former smokers can seek a reclassification on permanent policies, and improvements in health may warrant a better rate class. Policyholders with term coverage, facing insurability, may have the option to convert to a permanent policy.

For owners of permanent life insurance, an annual review is critical. Whole Life policies guarantee cash value and fixed premiums, with dividends often projected to cover future premiums or augment coverage. Dividends, a return of excess premiums, depend on the insurer's mortality experience, investment performance, and expense management. An in-depth review, complete with an updated dividend projection, reveals the policy's performance.

Fixed and Variable Universal Life policies maintain an account value, deducting the cost of insurance and other charges. Account value growth results from premiums, fixed UL interest, or variable UL investment returns. The policy's performance, including the duration of premium payments, hinges on the account value. A thorough review, incorporating an in-force ledger and updated projections, unveils the policy's current performance status.

Securities offered through LPL Financial, Member FINRA/SIPC.  Investment advice offered through WCG Wealth Advisors, LLC a Registered Investment Advisor.  The Wealth Consulting Group and WCG Wealth Advisors, LLC are separate entities from LPL Financial.

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.