The Life Insurance AuditBrett Lotspeich

What is the Life Insurance Audit?

The Life Insurance Audit provides a comprehensive evaluation of the performance of Life Insurance as well as recommendations to optimize these policies.

The evaluation will:

validate the appropriateness of coverage

ensures the coverage is titled appropriately

assess mortality and underwriting risks

provide a specific action plan with numerous options for their

existing coverage

The need to manage Life Insurance

A Life Insurance Audit provides valuable information

74% of existing policies can be restructured to provide greater value 1

At least 32 million U.S. households own insurance policies that are not appropriate for them 2

64% of those insured do not know what they currently have, or why they bought a policy 3

1 Ash Brokerage Advanced Markets Internal Marketing Study, 20102 Insurance Information Institute, 20083 TheInsuranceAdvisor.com

TOLI – Active Management of the Life Insurance

Lifestyle Changes

Family, financial or business status may impact life insurance coverage needs

Underwriting Advancements

Medical advancements, improvements in underwriting technology, as well as life

expectancies, may impact product pricing

Interest Crediting

Rates

Interest rates on life insurance policies have been impacted by overall market volatility and may cause policies to not perform as projected

Underfunded Policies

Policies that were underfunded may result in longer payment periods or higher than

expected premiums

Loans, Withdrawals or

Other Policy Changes

Loans, withdrawals or other policy changes may affect the policy’s performance.

Legislative Changes

Regulatory changes to state or federal estate laws may impact the policy.

Company’s Financial Strength

Ensuring the strength and stability of the company as reflected in the financial ratings of the major

rating agencies.

TOLI – Active Management of the Life Insurance

TOLI – Trustee Duties

Trust Account

Maintenance and appropriate usage of the Trust account is required.

Crummey Notices

Timely and consistent notification to Beneficiaries of the gift

Crummey Period

Maintaining the funds for the entire Crummey period.

Fiduciary A standard of care is required under the Uniform Prudent Investor Act

Fiduciary Duty

Duty to Monitor

Duty to Investigate

Duty to Manage

It Seems Easy……… What we’ve learned

Over 6,000 completed Audits - 65% of the time there is a significant issue with the current coverage:

Titling! – 72yr old Rancher Calls from Divorce Attorney’s? Simple Health Changes

Who is being represented? Basic underwriting or case structure issuesLack of preparedness or follow through on the

fulfillment of administrative duties.Who is managing what, if anything?

The Life Insurance Audit Provides Peace of Mind

Reviewing trusts’ TOLI policies can help protect fiduciaries from liability, assure that a trust’s intent is persevered and solidify the advisor-client relationship. Ensuring that the client’s planning will meet their needs

when they really need it. Opportunity for the entire advisor team to re-engage

with the client and secure the planning goals.