Navigating Life Insurance Strategies

Life insurance is often viewed as a "set it and forget it" financial tool, but the truth is, policies need ongoing management to stay aligned with your financial goals. Whether you’re a high-net-worth individual, a business owner, or someone evaluating your policy’s viability, you may find yourself wondering: Am I funding my policy correctly? Will it last as long as I need it? What are my best options if circumstances change?

A recent PolicyBeacon Report I reviewed for a client underscored the complexities of Universal Life (UL) insurance and how easily a policy can become unsustainable without proper oversight. The report outlined eight distinct strategies, each with different implications for cost, risk, and long-term planning.

Let’s explore the key pain points policyholders face and how I help my clients navigate their options.

Common Pain Points in Life Insurance Planning

1. Rising Costs and Policy Lapse Risk

• Many UL policyholders assume their premiums will sustain their policy indefinitely. However, due to increasing costs of insurance (COI) and non-guaranteed performance assumptions, policies can unexpectedly run out of funds and lapse.
• In the case of the PolicyBeacon report I reviewed, the planned premiums would only sustain the policy until age 95—short of the target age of 100.
• Clients often ask: “Do I need to increase my premiums, or is there another way to sustain coverage?”

2. Uncertainty About Policy Performance

• Many clients are unaware that their policy has no cash value or has underperformed, which can leave them in a vulnerable position when they expect to rely on it.
• The importance of regular policy reviews cannot be overstated. Without them, clients may be unknowingly underfunding their policies.

3. Lack of a Clear Exit Strategy

• Life insurance is a major financial commitment. Some policyholders may no longer need their coverage, but they aren’t sure whether to sell, surrender, or modify their policy.
• Many are unaware that selling their policy in the secondary market is an option that could provide liquidity instead of letting the policy lapse.

How I Help Clients Solve These Challenges

1. Strategy Selection: Finding the Right Path

• I guide my clients through eight different policy strategies, helping them evaluate:
  • Should they level-fund their premiums for predictability?
  • Would a lump sum payment be more cost-effective in the long run?
  • Should they consider reducing the death benefit to lower premium costs?
  • If the policy is no longer needed, should they sell it or surrender it for available cash?

By analyzing their financial needs, risk tolerance, and longevity expectations, I help clients determine the most optimal path forward.

2. Ensuring Policies Stay Funded

• Through financial modeling, I help clients understand what it would take to extend their policy’s lifespan and ensure they aren’t blindsided by increasing costs.
• This includes cash flow projections, policy illustrations, and risk assessments to keep coverage intact.

3. Maximizing Value in Life Insurance Planning

• Many clients don’t realize they have options beyond simply continuing to pay premiums or letting a policy lapse.
• I help them explore:
  • Selling the policy for a lump sum if they no longer need the coverage.
  • Exchanging the policy (1035 exchange) for a more efficient insurance product.
  • Leveraging the policy’s built-in cash value through loans or withdrawals where applicable.

By treating life insurance as a dynamic financial asset, rather than a static cost, I help clients optimize their policies for the best possible financial outcome.

A Real-Life Case Study: How a Simple Adjustment Saved a Client Millions

Recently, a client of mine faced a significant shortfall in their Universal Life insurance policy. The planned funding strategy was not sufficient to keep the policy in force until their desired age of 100.

After reviewing the policy’s mechanics, I helped them adjust their premiums and consider a more sustainable funding option that aligned with their financial objectives.

Through targeted adjustments, they were able to:

✅ Ensure coverage for their full intended lifespan.
✅ Avoid costly policy lapse.
✅ Free up additional liquidity by structuring their premiums more efficiently.

This kind of strategic policy management saves my clients millions of dollars while keeping their financial plans on track.

Final Thoughts: The Importance of Proactive Life Insurance Management

Most people don’t think about life insurance until it becomes a problem. But as policies age and financial needs evolve, it’s essential to review your strategy regularly to avoid costly mistakes.

If you have a life insurance policy and are unsure about its sustainability, or if you’re considering changes, I can help you:

• Assess the strength of your current policy.
• Identify cost-saving opportunities.
• Develop a long-term plan to maintain coverage or maximize value.

Let’s start the conversation. If you’d like a professional review of your life insurance policy to ensure it’s optimized for your future, reach out today. It could mean the difference between a policy that works for you—or one that works against you.