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TRANSCRIPT
Performance Evaluation is a planning concept de-signed to assist you in ex-ploring the need to review existing life insurance poli-cies and comparing those to current market offerings.
Life Insurance Policy Review
When our policy evaluation is completed you should be in a position to make an in-formed decision as to whether you should make suitable changes or main-tain your current insurance program as is.
Your Financial Tree
Stock Portfolio
Fixed In-come Portfo-
lio
Real Es-tate
Retirement Accounts
Life In-surance
As your financial tree grows, each branch needs regular care and maintenance. Call today for a complimentary life insurance review.
All the branches of your financial tree require care and maintenance. Due to changes through the passage of time, be it personal or in the market place, it may have become necessary for you to make some changes. It is a good bet that your insurance company has never contacted you to inform you know that a new mortality table has been released lowering the cost of insurance, or that a new insur-ance product has been released that better suits your needs and or is perhaps less expensive and this is why you must al-ways be proactive in these mat-ters.Policy Evaluation gives you an under-
standing of actual policy performance with an eye towards maximizing value.
Business start-ups be-come industry leaders. Children grow up and have children of their own. Bigger houses, smaller houses, vacation houses, Tuition, Retire-ment. A lot can change in your life after you buy a life insurance policy – and those changes can affect the policy you own.
J. Streicher Policy Review Process
Needs Analysis
Change is one thing you can count on.
Products today are much more efficient than they have ever been. Medical ad-vancements and healthier lifestyles contribute to longer life expectancies. New prod-uct developments have changed the landscape completely.
Because of this, many new policies have lower mortality expenses than existing poli-cies, sometimes significantly lower. This may result in a re-duced cost for life insurance. Even if your policy has per-formed up to par, the innova-tive products available today may improve cash accumula-tion, strengthen underlying guarantees or reduce pre-mium outlay.
Product Pricing & Perfor-mance
Dramatic im-provements in medical sci-ence has come with corre-sponding in-crease in life expectancy.
Better Cost Ad-justed
Coverage
Product Im-provements
The policy you bought, when you bought it was (most likely) an ex-cellent prod-uct.
You spend your life build-ing a portfolio of stocks, bonds, real estate and IRA's.
You keep a good pulse on the performance of these finan-cial products, monitoring market fluctuations, interest rate trends and pricing effi-ciencies. You continually set and re-set investment objec-tives as your life’s plan evolve, making changes to both financial product and in-vestment strategy, as needed.Formally or informally, you’ve set up a periodic financial re-view process tailored to your individual needs. That’s good financial practice.
Life insurance products are financial products that require similar periodic care.
Subjecting your life insurance portfolio to a formal policy re-view process is an important, financially sound practice. Pe-riodically reviewing the role that life insurance plays can make a marked difference in your ability to reach your goals.
Has your current Life Insurance product performed up to or exceeded ex-pectations? Have those expectations changed since policy inception? Does the marketplace offer more efficient products? Has your life’s plan changed?
J. Streicher Policy Review Process
The end result may vali-date your original policy, offering a few suggestive funding tweaks, or It may also result in a complete policy overhaul.Either way, you achieve the goal of evaluating an im-portant financial product in your portfolio – your life in-surance policy.
Result
Performance Evaluation of-fers a free analysis of your in-force coverage, reviews your current life insurance needs and integrates both with the best products the market has to offer (which may just be the one you’re currently holding!)
Why Do A Review?
ResultWhy?
Performance Evaluation helps keep your financial strategy intact. If needs or plans have changed, then your policy may need to be adjusted to fit new circum-stances. You may have too little or too much insurance for the present situation and future goals.
Evaluation
Evalua-tion
Carrier Selection Process
One carrier may under-writes a particular medical risk better than another. Since each carrier offers slightly different guidelines when it comes to underwrit-ing certain risks, it is impor-tant to “customize” the car-rier that best fits your per-sonal risk factors.
Medical Underwrit-
ingFinancial risk assessment offers up an entirely differ-ent set of underwriting skills. The life insurance carrier chosen to under-write the amount at risk depends on the size of the risk, the nature of the risk, and the required financial justification supporting that risk.
Financial Underwrit-
ing
Because we famil-iarize ourselves with risk selection and the tools un-derwriters use to assess risk, we of-fer you a unique benefit that most practices just don’t understand.
Policy Selec-tion
The life insurance carrier you choose to cover the risk could be as impor-tant as the risk amount and product type.
There are many things to take into consideration dur-ing the carrier selection process. when buying insur-ance and take into consider-ation the following factors in your carrier selection process
Each individual life insur-ance carrier offers their un-derwriters distinct guidelines from which to underwrite a risk both medically and fi-nancially.
J. Streicher Wealth Man-agement is your guide in the carrier selection process and your advo-cate in the underwriting process.
Underwriting large face amounts or complex advanced concepts requires certain sophistica-tion by both the life insurance carrier and the under-writer.
Carrier Se-lection
Carrier Selection Process
Performance Evaluation offers a free analysis of your in-force coverage, reviews your current life insurance needs and integrates both with the best products the market has to offer.
Policy Selection
Carrier Size
The size of a carrier should
be a factor as well. Would
you want to risk a $10 mil-
lion claim on a carrier
with admitted assets of
$100 million? That’s 10% of
the carrier’s total as-
sets. Generally, carri-
ers with greater assets have
the ability to accept larger
risks more favorably.
Price
This is the most obvious in
the selection process. A
carrier may rank highest
in all other factors
listed, but it must have a
competitive product to
bring to the marketplace.
Rating
Third party carrier ratings of-
fer an unbiased financial
measure as to the stability
and claims-paying ability of
a financial institution (ie A.M.
Best Company, S&P, and
Moody’s)
Product De-sign
Often times one gets what they
pay for, which is why it is very
important to consult your Life
Insurance professional on
the important product
features and riders available on
any recommended life insur-
ance contract.
All of these factor should be consid-ered in tandem during the selection
process.
J. Streicher Wealth Manage-ment has long standing rela-tionships with many top rated insurance companies and of-fers a wide choice of quality products designed to help you meet your diverse personal and business needs. Take a look at the insurance options we offer and work with your Financial Advisor to help de-termine which one is right for you.
Our Experience is Your Guide
Client Situation:
On the following slides is a sample evaluation of a policy review that was performed for a client. In this scenario the client had previously purchased two VUL policies the rationale being that he would purchase one policy for each of his children and fund them as an alternative savings account and quasi estate planning strategy.
On the surface this may appear to be a legitimate strategy but in reality it was not structured to maximize the benefits of this type of insurance policy and the client is rapidly losing ground in these policies due to the fact that his economic situation has changed precluding him from fund-ing the policies.
After a discussion with the client he informed us that due to growing business concerns his per-sonal financial situation had changed and that it was his intention to no longer pay the premiums on these policies and he wanted to focus strictly on the death benefit and not the cash accumula-tion. His charge to us was simply to tell him what he should do.
Real World Example
Real World Example
Evaluation Process:
The first thing we did was to find out where he stood in regards to his current insurance situation. In order to determine that we requested in-force illustration scenarios from the issuing insurance company on the two policies in order to evaluate the clients current position. We asked the issuing insurance company to compile policy in-force data based upon the following assumptions; that no addi-tional premiums would be paid on either policy and the in-force policy scenarios should reflect a 0% and 3% gross rate of return. The in-force data shows that policy 1 will lapse at age 70 with the 0% gross return assumption and will lapse at age 78 at the 3% gross return assumption while policy 2 will lapse at age 64 with the 0% gross return assumption and will lapse at age 69 with the 3% gross return as-sumption. In effect the client has uncer-tain term life coverage at this point.
Real World Example
Conclusion:
Since cash accumulation was no longer a priority our position was to focus specifi-cally on the two primary objectives for the client, no future premium payments and a guarantee of the death benefit for life. Our advice was to consolidate the cash value of the two policies and exe-cute a tax free exchange of the combined cash value from the two VUL policies into a single policy and solve for a guaranteed death benefit for life. The market survey to the left shows the carriers identified and considered for this policy exchange. The Lincoln National pol-icy was chosen due to the higher death benefit on a guaranteed basis.
