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Procedures and Cost for Basic Preliminary Review of Existing Permanent Life Insurance

  1. Obtain authorization from client to request in-force ledger of existing insurance policy showing projections for future years.


  2. Also, where possible, obtain and review original policy, including application, and illustration used at the time the policy was sold.


  3. Have an independent agent run comparable illustration with reasonable underwriting and investment assumptions to test (1) reliability of projections with regard to policy’s duration (i.e., whether it will likely survive as long as insured might live) and (2) competitiveness of policy’s internal rate of return compared to possible alternatives of similar risk.


  4. Review the insurance company’s financial soundness ratings from the various rating agencies (A.M. Best, Moody’s, Standard & Poor’s, Fitch, and Weiss Ratings).


  5. Prepare written review of preliminary findings and recommendations and possible next steps. These could include: (1) do nothing, (2) conduct more in-depth testing of assumptions behind policy projections, (3) increase premiums, (4) reduce death benefit, (5) seek new or substitute policy from same company (without any new underwriting required) that would guard against risk of policy lapse, and (6) explore possible replacement of policy with one offering a likely superior long-term rate of return without an increase in risk.




    Estimated cost for basic service: $500