POLICY ANALYSIS AND CARRIER REVIEW

WHY POLICIES NEED TO BE REVIEWED REGULARLY

Prolonged low interest rates have pressured insurance companies to seek new avenues to increase profitability. In addition to raising the cost of new policies and reducing their contractual guarantees, several major insurance companies have increased mortality costs on existing coverage.

In these cases, the projected duration of the policies will be shortened, and policyholders will be required to pay significantly increased premiums to be certain their policies will last their lifetimes. These challenges have become more problematic when larger estates and corporate insurance arrangements are involved.

THE IMPORTANCE OF CARRIER FINANCIAL STRENGTH

Several insurance companies are making foundational changes in the way they conduct business which could have an adverse impact on your clients’ policies. For example, some companies have sold large blocks of business to non-insurance entities which may not be equipped to properly manage in-force policies.

LIKE MANY ADVISORS, PERHAPS YOU HAVE CLIENTS WHO ARE ASKING “WHAT SHOULD I DO…”

  • My insurance company just increased my annual premium from $40,000 to $180,000
  • My insurance coverage that was guaranteed until age 100 will now end at age 85
  • I can’t afford or don’t need my insurance coverage any longer
  • My insurance company’s financial ratings were significantly downgraded
  • Now that estate tax thresholds are lower, do I still need insurance for my estate plan

GIVE YOUR CLIENTS PEACE OF MIND

With years of experience reviewing thousands of complex insurance arrangements, Strauchon & Company has the expertise and proprietary analytical tools to evaluate your client’s policy and the strength of the life insurance company that is guaranteeing the policy.

With each policy analysis, you and your clients will receive a detailed, written report with recommended action steps. The results are often surprising, always enlightening, and enable you to give your clients and trustees peace of mind.

SECOND OPINION UNDERWRITING

Our proactive underwriting advocacy process helps remove barriers to obtaining favorable underwriting offers & policy pricing.
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THE MOST COMMONLY-INVOLVED ASPECT OF INSURANCE PLANNING

When your client’s estate, financial and business planning strategies involve life insurance funding, the most difficult challenge may be negotiating the best possible offer from the insurance companies. This is particularly true for larger insurance amounts on older clients with medical issues. In these cases, managing the underwriting process is critical for obtaining the best possible offer and avoiding the risk of being denied coverage.
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WHEN TO GET A SECOND OPINION

If your client has a complicated medical history, or if large amounts of insurance are involved, Second Opinion Underwriting Consulting can help avoid the risk of being denied coverage or the surprise of receiving an offer that is tens of thousands or even hundreds of thousands of dollars higher than expected in premium costs.

HOW UNDERWRITING ADVOCACY CAN MAKE A DIFFFERENCE

Our understanding of how insurance underwriters make decisions points to the importance of making sure applications are submitted in the most favorable light. Underwriting Advocacy increases the
potential for positive underwriting offers and pricing through a proactive approach that adds detail, expertise and clarity to the application process. Additionally, our underwriters leverage their strong technical abilities and deep relationships with home office underwriting departments to proactively represent your client’s case.

POLICY MANAGEMENT

The life insurance industry is constantly evolving; impacting new and existing coverage. In many incidences, this has led to some policies not performing as originally intended, creating a mismatch between your clients’ expectations of their policy and their policy’s results. Additionally, policyholders’ needs and objectives can change after the policy is initially designed.

To ensure your clients’ expectations and financial needs are always being met, Strauchon & Company uses state-of-the-art technology and a dedicated team of experts to provide ongoing monitoring and management of your clients in-force life insurance policies.

Using a detailed, written review process and annual analysis, we work closely with you and your client to determine if the policy’s performance meets current expectations, and if it does not, other solutions may be identified.

On an ongoing basis, we provides:

  • Monitoring of real-time, effective ongoing policy performance
  • Access to policy information in one centralized location
  • Automated trust administration for documenting policy performance
  • Ongoing policy service by a trusted provider

By working together, we can form a durable bridge that connects your clients’ expectations of promised policy benefits with actual results.

LIFE SETTLEMENTS

Client situations may arise when they no longer need or want their policy. Generally, this is due to:

  • Changes in the policy structure (e.g., carrier-imposed premium increases, reduced duration of coverage, and other policy performance problems) and/or;
  • Changes in your clients’ planning needs (e.g., retirement income needs, changes in estate taxes, business changes, etc.)

When these situations occur, we work with you and your client by first analyzing the existing policy and examining the potential for a life settlement. Based on our findings and the client’s objectives, we provide detailed analyses and recommendations of various options that may include:

  • Allow the policy to lapse
  • Surrender the policy for cash value
  • Restructure the policy
  • Exchange for a new life policy or an annuity
  • Pursue a life settlement when a higher net value seems likely

In a life settlement agreement, the current life insurance policy owner transfers the ownership and beneficiary designations to a third party, who receives the death proceeds at the passing of the insured. As a result, the buyer has a financial interest in the seller’s death. When an individual decides to sell their policy, he or she must provide complete access to his or her medical history, and other personal information, that may affect his or her life expectancy. This information is requested during the initial application for a life settlement. After the completion of the sale, there may be an ongoing obligation to disclose similar and additional information at a later date. A life settlement may affect the seller’s eligibility for certain public assistance programs, such as Medicaid, and there may be tax consequences. Individuals should discuss the taxation of the proceeds received with their tax advisor. ValMark Securities, Inc. supervises all life settlements as a security transaction. ValMark Securities, Inc. and its registered representatives act as brokers on the transaction and may receive a fee from the purchaser.

REASONS WHY YOUR CLIENT MAY WANT TO TERMINATE THEIR POLICY

  • Recently had their insurance premium increase significantly and unexpectedly. As a result, they no longer want to pay premiums and would like to sell the policy for a lump sum cash payment.
  • Will likely outlive the maturity date on their life insurance policy.
  • Estate tax exemption thresholds have been lowered, making estate planning life insurance unnecessary.
  • Funds are needed to focus on personal needs such as retirement, long-term care insurance, or family emergencies.
  • Term policy is nearing the end of a term period. The client can convert to a permanent product and receive, through a life settlement, proceeds for an asset that will terminate if not converted.
  • Business is sold or changes are made that result in insurance no longer being needed.
  • Executive has retired and received unneeded insurance through a deferred compensation arrangement.
  • Policies held within a trust are no longer meeting the original trust plan objectives.
  • Current policy is underperforming. The need for insurance may still exist, but the client wants coverage that has better guarantees.
  • Client would like to exchange their current policy for a variable one that provides equity opportunities.
  • Business partners have made changes within their Buy-Sell Agreement which makes insurance no longer necessary.
  • Charitable-owned policies are under-performing and need to be replaced in order to preserve the benefit to the charity.

IS YOUR CLIENT A CANDIDATE FOR A LIFE SETTLEMENT?

To determine if a life settlement may be the best potential course of action for your client, there are several general criteria to look for at the outset.

  • Individuals age 65 and older (age 70 or older if female)
  • Life expectancy of 14 years or less
  • Decline in health from original policy issue
  • Life insurance policies with a net death benefit of $250,000 or more (no maximum)
  • Policy type: Universal Life, Guaranteed Universal Life, Survivorship Universal Life, Variable Universal Life and Convertible Term (Sometimes Whole Life)
  • Owner can be an Individual, Trust, or Corporation
  • Premium should be 5% of the Death Benefit (or less) and Cash Surrender Value should be 15% of Death Benefit (or less)

CONTINUING EDUCATION

THE BRIGHTER SIDE OF CONTINUING EDUCATION

Are you and your colleagues are looking for an antidote to the tedium and expense of obtaining Continuing Education credits? Our CLE and CPE accredited courses are complimentary and can be held at your offices over lunch, breakfast or after business hours. No matter what venue you choose, you will find our sessions to be lively, entertaining and informative…with practical ideas and solutions you can confidently convey to your clients.

 

ADVISOR TESTED

Tom Strauchon has conducted hundreds of sessions for professional advisors. As the senior life insurance planner for one of the nation’s top accounting firms, he is known for his ability to boil down complex concepts into easy to understand strategies to benefit advisor’s clients. To book a complimentary session with Tom for your firm, contact us atinfo@Strauchonandco.com..

LITIGATION SUPPORT

EXPERT GUIDANCE FOR LITIGATION INVOLVING LIFE INSURANCE

Whether your firm represents the plaintiff or defendant, there are times when complex issues involving life insurance coverage or policies become pivotal to the outcome of your case.

As a senior insurance planner who has consulted with advisors on thousands of complex life insurancecases, Tom Strauchon has the experience, credentials and expertise to provide litigation support in areas such as:

  • Research and analysis of insurance regulatory considerations and relevant court cases
  • Briefings for attorneys on insurance-industry issues and standard practices
  • Review and analysis of insurance contracts, illustrations and pricing decisions
  • Expert opinion letters, reports, recommendations and court testimony regarding insurance matters
  • Assistance with depositions regarding insurance matters
  • Discovery planning and research involving insurance matters
  • Identification and development of supporting arguments
  • Advice on state and federal regulatory and tax issues
  • Initial assessment of legal position
  • Quantification of potential financial exposure
  • Identification of various settlement options and their probable costs

474 Sandhurst Dr
Highland Heights, OH 44143

Office: 440.895.7600

Email: tom@strauchonandco.com

Have a case you would like to discuss?

Securities Offered Through ValMark Securities, Inc. Member FINRA, SIPC

Investment Advisory Services Offered Through ValMark Advisers, Inc. a SEC Registered Investment Advisor 130 Springside Drive, Akron, Ohio 44333 | 1-800-765-5201

Strauchon & Company, LLC is a separate entity from ValMark Securities, Inc. and ValMark Advisers, Inc.

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