Policy Review

Strategically Exiting a Life Insurance Policy

As we close out 2024, we are looking for ways to prepare our clients for a successful 2025.  As tax law and other legislation evolve, it’s prudent to complete regular policy reviews; the current political climate creates an apt opportunity to do so.  Some clients might be underinsured while others might find themselves over-insured.  We are ready to present solutions that can remedy either scenario.

There are several triggers that can instigate a policy review:  premium fatigue, unexpected additional premiums, changes in family dynamics, retirement, health changes, the political landscape, recent rulings (such as Connelly), new product availability, increased or decreased net worth, changes to a buy/sell agreement, changes to a trust, etc.  When a life insurance portfolio is audited, the purpose and design of each policy should be weighed against the client’s current goals as well as those of their family or business.  If the policy purpose and the goals do not align, policy improvements and exit strategies should be considered.

Life insurance is not one size fits all.  When implementing a policy, it is wise to consider each client’s fact pattern and structure a plan that fits their needs.  The same can be said when exiting a life insurance policy.  If the policy is no longer needed for death benefit, the assets within the policy and other needs of the client should be considered before the policy is simply surrendered. 

Outlined in the graphic below are some enhancements and exit strategies for policies that were originally implemented with the intent to use the death benefit only.  If a client’s policies no longer align with their goals, these and other strategies might be beneficial to their overall personal or business planning.

Since we spend much of our time working with advisors, many of our new client relationships come directly from attorneys, accountants, and wealth managers. We have gained the trust of these advisors, and in turn have earned the privilege to be of service to their clients.  Contact us with any questions or opportunities to help you or your clients achieve identified goals.  This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you.