Your Life Insurance Review | Good Insurance Policies = Good Estate Planning
Trusts & Estate Planning Attorney
First, let me just clarify that I do not sell insurance and I will not do an insurance policy review. But if you think you need a policy or need a review, I can recommend experienced professionals to help you.
However, I will advise that you review insurance policies on a regular basis, particularly your life insurance policies, as well as advise you what your potential life insurance needs are.
It just makes good estate planning sense, and, if you are acting as Trustee of another’s Trust, it is your fiduciary duty.
On the good sense side, many factors can affect the quality of your life insurance policy. Life, and financial environments are constantly evolving – your policy should reflect those changes.
When reviewing your policy, consider changes in:
▪ Interest or dividend rates, especially dividends to pay premiums
▪ Your life expectancy and health
▪ Overall mortality rates for your demographic
▪ Testamentary objectives of your estate
▪ Loans against the policy
As a Trustee of a trust in California, it’s your duty to oversee and manage the trust’s investments, handle the related accountings, and disburse information to the beneficiaries (and possibly the courts). That means you’ll have to Invest or manage Trust assets. If a life insurance policy is underperforming, this could be problem. A Trustee should be monitoring life insurance policies that make up an asset of the trust.
Review Life Insurance Often
“How often? I recommend a policy review every two to three years. Most insurers will review life insurance policies without charge, and without obligation. And reviewing your policy will not necessarily mean that you will have to change your coverage.
Some topics you should discuss with your agent are:
1. Protection: Do you have sufficient death benefits?
2. Annual Premiums: Are you meeting your needs in the most economical way possible?
3. Ownership: Is your policy tax-efficient, or will it create financial liability for you or your beneficiaries?
4. Designations: Are you up to date? Did you have more children, or go through a divorce or another marriage?
5. Supplements: What new benefit options are available?
6. Cash & Performance: Does your policy meet your expectations?
Again, you’ll need to contact your life insurance agent for a thorough life insurance review, but keep the above-listed questions in mind when you do it.
If you are uncertain as to what your life insurance needs are (income replacement, an investment, a tool to fund a buy-sell agreement, or to pay estate taxes or even just to provide your heirs with liquidity or additional wealth), please contact us to schedule an estate plan review at your earliest convenience.
Kira S. Masteller is a California Estate Attorney and Shareholder in the Tax and Estate Planning Practice Group at our Firm. She can be reached at firstname.lastname@example.org, or by calling 818.990.2120.