posted 06/16/10 | Wealth Management
Andy Bryan, Vice President & Strategic Advisor
Enterprise Trust Company
You spend your life building a portfolio of stocks, bonds and other financial assets. As a prudent investor, you also probably set up a periodic financial portfolio review process to monitor and reassess the performance of your financial assets to ensure your goals are being met.
But what about your life insurance policy? Has it been reviewed recently? Does the marketplace offer more efficient products since the last time you reassessed your portfolio? Life insurance products are an often purchased and forgotten aspect of your portfolio that require careful review, but often become neglected.
Your policy may no longer be worth what it once was. During the boom years of the market in the 1990s and mid 2000s variable life insurance policies were popular tools for clients because the market returns made them unrealistically attractive. The reality is that the SP500 index has returned -0.7% for the last ten years and US 10 Year Treasury yields are now at twenty year historic lows. As a result, many policies are now under funded or in financial trouble.
Have you considered if your current policy performed up to or exceeded your expectations? Have those expectations changed since the policy’s inception? Have your life insurance needs changed? A couple who purchased their policy back in 1996 and never reviewed it were shocked to find out that for all the years of premiums that had been paying into the policy they no longer had a guaranteed death benefit and since the policy was a variable, they would only be covered through age 82 before lapsing. After evaluating the client’s needs, we were able to exchange their policy for one with a guaranteed death benefit for life with no extra premium.
Another family came to us with a policy on which they were currently paying over $150,000 a year in premiums and wanted to cut the annual costs in half. We were able to reduce the annual premium to $70,000 a year and keep the initial $10,000,000 in death benefit as well as guarantee the policy for life.
If you are uncertain if your current life insurance policy continues to meet your needs, you may want to consider a complimentary program offered by Enterprise Trust Company called Performance Evaluation.
Through this process you could:
• Save money by reducing premiums
• Pay the same premium for an increased death benefit
• Save a policy from lapsing
• Guarantee death benefits for lifetime
• Confirm life insurance company stability
• Adjust coverage to keep pace with life changes
Typically we like to think of life insurance as a guarantee we can put on the shelf and forget all about. Not only is this naive thinking but also the overly aggressive assumption sold in many variable life products have left many policy owners in jeopardy of receiving zero death benefits. The recent turbulence in the financial markets and lackluster performance of many asset classes have left many life insurance policy holders vulnerable. As a policy owner or trustee, consider having the insurance products in your portfolio reviewed by one of our advisors at Enterprise Trust Company. Call us today to schedule complimentary appointment.
Andy is a Vice President and Strategic Advisor for Enterprise Trust Company. He has over ten years of experience helping clients create and grow their wealth. You can contact him directly at 314.512.7266 or .