The Forgotten Asset
The Importance of a
Life Insurance Appraisal
By: Mary Oliva
After meeting with hundreds of affluent clients throughout my career, I find there is a lack of consumer identification with the purchase of life insurance -
Do these individuals realize that life insurance is an Asset?
During an introductory meeting when I inquire if they own life insurance, I encounter a common reaction from those with existing life insurance policies. The typical comments include:
"I'm not sure what type of product I purchased",
"I don't remember what company issued the policy", or
"I haven't reviewed the policy since I purchased it".
If I were to inquire about their investment account, they would respond immediately and with certainty about the account balance, custodian bank and average rate of return. This has lead me to reach the conclusion that Life insurance is a forgotten asset and has motivated our firm to shift this paradigm for every client and/or prospect we have the privilege to meet with.
If we define an Asset as something you might purchase today with the hope that it increases in value or provides cash flow in the future,
Insurance qualifies as an asset. Like any other asset, it should be evaluated on a regular basis by a professional and the policyholder should be aware of its basic characteristics and how it will benefit their estate.
A comprehensive life insurance appraisal should empower the Client to become aware of the key facts related to the asset to include:
- Name of Insurance Company and Jurisdiction of Contract
- Current Rating and Financial Standing of Carrier
- Policy Number, Issue Date , Renewal Date
- Premium & Payment Mode
- Name of Owner & Insured, which may be different
- Primary and Contingent Beneficiaries
- Death Benefit Amount
- Type of Product / Characteristics / Efficiencies/Deficiencies
After obtaining the facts relating to the policy we then proceed to analyze how the life insurance policy fits within the Client's current personal situation and asset allocation. Because life Insurance is usually obtained during the Accumulation Phase of the Wealth Management cycle, we usually find that through time the Client's needs have evolved but the life insurance has remained stagnant. As trusted advisors we should educate the Client about the triggers that may require a change to the life insurance policy.
- Increase or Decrease in Net Worth
- Changes in Employment - Corporate to Entrepreneurship
- Children's Education Funding
- Retirement Goals
- Divorce
- Tax Liabilities
- New Family Members (in-laws and grandchildren)
Upon completion of the appraisal the Client will benefit from an up to date and clear understanding of the Asset, empowering them to maximize the benefits it can provide during their lifetime and for future generations. |
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From Martin's Desk
The privilege and the benefits of having access to American companies.
When evaluating the needs of high net worth clients in Latin America, there are a variety of items to take into consideration. Among these, are the Financial Rating of the Company, the Retention Amounts and Costs.
Today I would like to share with you the savings opportunities which are available to those clients who qualify for the Foreign Nationals Program offered by U.S. domestic companies.
Below you will find premium comparisons:
|
Company |
Product |
|
Age 50 | |
Amount Covered |
Male |
Female | |
Non-Smoker |
Smoker |
Non-Smoker |
Smoker | |
Intl |
Term 10 |
10,000,000 |
36,500 |
94,800 |
31,800 |
84,200 | |
Term 20 |
10,000,000 |
56,600 |
147,200 |
40,400 |
97,100 | |
Term 30 |
10,000,000 |
82,600 |
199,200 |
52,900 |
121,400 | |
US |
Term 10 |
10,000,000 |
12,330 |
41,730 |
10,430 |
31,830 | |
Term 20 |
10,000,000 |
22,030 |
76,130 |
16,830 |
52,930 | |
Term 30 |
10,000,000 |
37,830 |
122,830 |
26,430 |
89,530 |
In both examples the best classification available was utilized. These amounts are valid through February 2013.
As exemplified by the table, significant cost savings is available for those individuals who meet the requirements for the Foreign National Program. In addition, I would like to highlight the importance of Classification Parameters and the higher Coverage amounts which are available with the US carriers.
I am available to discuss in greater depth the benefits and disadvantages available throughout the differing regions of Latin America.
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