You may think of life insurance as a “one and done” type of deal. You meet with a broker to discuss your goals and beneficiaries, attain coverage and pack the policy away in your fire safe. However, life insurance is actually something that should evolve along with what it covers – your life! Too often we have clients who come to us with old policies that have not been serviced by their original broker. This lack of communication over the years causes issues when it comes time to manage the policy.
The Wharton & Power Team has been reaching out to people who are holding policies that previous servicing agents have ignored. These conversations have uncovered some interesting situations to say the least, affirming the importance of staying on top of your life insurance.
Identify Theft
As policyholders age or become more reliant on others to manage their estate, they become more vulnerable to identity theft. We recently received a call from a person claiming to be the fiancé of a policyholder’s son. She was asking for private information about the policyholder. Since we do not have a relationship with this family, we had no idea if she was who she said she was and therefore could not help. Having a relationship with your life insurance broker who knows you and your family can help avoid these situations.
Tax Implications
Another policyholder we spoke to had been hanging on to his policy for over 50 years. He was looking to surrender it but doing so offered large tax implications. If his servicing agent had been working with him all along, he would have made changes to his coverage as his life progressed. Now he is stuck with a policy that no longer serves his needs and is presenting a financial burden.
Significant Life Changes
Divorce has tremendous financial implications, including life insurance policies. We spoke to a woman who still owned a policy on her now ex-husband. Their daughter is the beneficiary, but the policy had not been funded since the divorce. We helped our client decide if it was worth continuing that policy or start fresh with another type of coverage.
Underfunded Policies
One person we spoke to has had two life insurance agents in 6 years. He felt he was not being served well, so reached out to us. It turned out he was right – we discovered that his policy had been underfunded which he was not aware of. The changes in his brokers led to rollovers within his universal life policy which were not taken into account in his premiums. He had been making his payments as instructed but they were too low. The expected guaranteed payout that he had planned for was now in jeopardy. Fortunately, he reached out to us, brokers who have built their business on long-term client relationships. We are currently evaluating his position to uncover the best policy for his goals.
Changes in the Life Insurance Industry
We’ve been in business over 30 years, but we are still learning more about the ways life insurance policies can be written. Many of the polices we have been reviewing are very old and structured differently than anything we have seen before. Often, we are helping people manage an old policy they forgot they had or helping family members of elderly relatives make good decisions today on something that was written 70 years ago. What worked long ago in life insurance is not always applicable to someone’s current stage of life. We help these policyholders and their family members determine the best coverage for what is going on today, and their plans for the future.
One thing we are assured in life is that it will change. Keeping a relationship with your life insurance agent will help ensure that your policies evolve with your needs. The Wharton & Power Team will help you determine if you are covered correctly and if your goals will be met when it comes time to activate your policies. If you are concerned your life insurance no longer applies to your current stage of life, reach out. Send me an email or give me a call at 317.663.4138.
