February 8, 2012
It's a good idea to periodically have your life, disability and long term care insurance policies reviewed by an insurance professional. An analysis may determine that your policies are just fine and that they fit your financial goals.
In some cases, though, a review uncovers internal problems with your policies, such as the fact that they may lapse prematurely without additional, unanticipated premiums. It may also be determined that the policy no longer fits your needs.
There are also two major factors at play. Many older policies were designed using mortality tables from the 1950's, which assumed people died fairly young. Newer policies incorporate the use of updated mortality tables. Assuming that the "pool" of insured people live longer has driven down premiums for many policies. Additionally, the life insurance business is more competitive than ever, lowering premiums.
A review can identify opportunities to do a policy "replacement", and move the existing cash value of the policy into a new policy, in a tax-free fashion. Sometimes such a move results in lower policy premiums going forward and/or additional death benefit. Of course, there are many issues to be considered when doing such a change, such as the fact that starting a new policy may mean starting a new "surrender period" where there will be a (declining) penalty if you surrender the policy within a certain number of years.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).