Life Insurance Review

It is always prudent to review your life insurance policies. In addition, to the basic consideration of cost versus benefit, the following reasons and situations should trigger a review of your life insurance policy and your current estate plan.

Changes in Needs and Goals

Your reasons and need for an existing policy may have changed. You may have bought a policy when you were young to protect your family against an early death. Now you are older and the kids have gone to college or medical school and are out of the house and independent. However, if you have become successful and wealthy then you may need the life insurance for other reasons such as federal estate or state inheritance taxes.

Has Health of Insured Improved?

If your health has improved since the policy purchase, you may be able to pruchase the same coverage at a lower cost. Changes in longevity and actuarial assumptions may change the costs involved so all the more reason to check this out.

Estate Tax Exposure

Depending on your life expectancy and what Congress does with the estate law, or if your assets are low enough or have decreased in value, you may no longer need the policy to pay estate taxes. With the federal estate tax exclusion now at $5 million, it may be assumed federal estate taxes are no longer a consideration. But with looming deficits and uncertaintly with Congressional direction (some talk of a $1 million exemption), the decision to drop life insurance should be looked at very carefully.

Check Policy Design

Many older policies were designed to endow at age 100, which means the cash value would equal the death benefit. Today there are new policies that do not endow. If you want only a death benefit you could pay less premiums with a newer policy. However, all angles need to be looked at when it comes to plan design and this is often a very tough decision to give up an old policy for a new one.

Check Insurance Company Credit Quality

Requesting a financial report for the insurance company and obtain a current rating of its financial strength from the various rating services should be done periodically.

Consider 1035 Exchange For Policies with Significant Cash Value

Using this exchange can defer gain. However be sure to weigh other options such as surrender and buying a new policy. You need to run the numbers.

Check the Policy’s Projected Performance

A policy should have projections run on how it will perform based on life expectancy or beyond. These projections should be periodically checked against actual performance to minimize unpleasant or unaffordable surprises down the road.

Check Ownership

A policy owned by the insured would be part of his taxable estate under federal tax laws. State inheritance tax laws need to be checked to see if insurance is taxable or exempt. The question of whether such policies should be owned by others such as an irrevocable trust to keep it out of the taxable estate should be discussed with an experienced estate planning attorney.

Make Sure Your Insurance Agent is Independent

Ask the agent if he or she is product neutral. Do they use only one primary company or many. Captive agents cannot sell all products on the market, which may put them at a competitive disadvantage.


These are just some of the more important considerations when evaluating current insurance life policies. There are other issues that can and will arise with integrating life insurance into a comprehensive estate and financial plan that may require imput and guidance from your estate attorney. Please contact us if you need objective and unbiased insignt and guidance in this area.

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From their offices in Philadelphia, PA, the law firm of Steven J. Fromm & Associates, P.C. provides a full range of estate planning, probate and estate administration, tax, business and corporate legal services to clients throughout eastern Pennsylvania and the Delaware Valley, the Lehigh Valley Area, the Five-County Area, Bucks County, Delaware County, Montgomery County, Chester County, Philadelphia County, Berks County, Lehigh County, Lancaster County, York County, Harrisburg, Norristown, Doylestown, Media, West Chester, Allentown, Lancaster, and Reading.