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Keep up with the changes in your customers’ lives
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reviewing life insurance policies . . .
Good business for you. Good protection for them.
Your customers should look to you when it comes to their life insurance coverage. after all, you’re the expert.
so when you take the initiative and review your customers’ policies every one to two years, it’s an opportunity for you to build loyalty and increase your business.
Your customers will come to trust that you’re looking out for them, while ensuring that they have proper coverage at every stage of life.
What you gain
■ a chance to prove your interest and knowledge to your customers ■ Loyalty that can last for years – even to the next generation ■ The opportunity to build your business with existing customers ■ cross-selling opportunities
■ explicit and enthusiastic referrals
What your customers gain
■ The chance to consider the changes in their lives and financial situations ■ The opportunity to adjust their life insurance coverage, or opt to keep their
current policies
■ Peace of mind, knowing they have proper policies that will take care of their
Building on your current customer base
can be simple
During these economic times, it’s easy for people to overlook the purchase of new life insurance policies.1 However, people who already own policies understand that fixed
life insurance is still a solid, stable investment. That’s why working with your current customers is an essential part of building your business.
chances are, your male baby boomer customers already have some sort of life insurance – but less than 70 percent of women in this generation have life insurance.2 as they near
retirement, it’s a good time to make sure families like these have the coverage they need to take care of their children, their charities and even their aging parents.
Don’t forget, these baby boomers will likely influence their children’s insurance purchasing patterns, as well. The majority of Generations X (59 percent) and Y (83 percent) depend heavily on word of mouth, especially from their parents.2 People from these generations
are also more likely to purchase products that are ranked highest, with personal contact and service factoring as more important than price or brand.2
Your plan is already in place
a life insurance review is simple when you follow this five step guide. it’s comprehensive, systematic, and provides all the tools you need.
step 1
Get in touch
step 2
Have a conversation
step 3
Evaluate and analyze
step 4
Discuss your findings
step 5
customer Materials
Materials are available to assist your customers with the Life insurance review process including:
■ The facts of Your Life (LBL7004)
■ The Little Book of Life essentials (LBL7005) ■ consumer presentation (LBL7364)
■ Life insurance review customer Brochure (LBL7662)
visit accessallstate.com/Lifeessentials to access these Life insurance review materials. while there you will also find producer materials, including these flyers: Top Life insurance Problems (LBL7841), which Policy is Best for your customer (LBL7862) and why Life insurance review (LBL7861), as well as the Life insurance review Brainshark.
Get in touch
You have several choices in the way you want to approach your customers about the review process. if you already have a close, personal relationship with your customer, you could just make a simple phone call and set up an appointment.
There are also marketing materials available to you. These helpful tools will help you get your customer’s attention and prepare them for a phone call from you. You may include any or all of these materials:
■ a letter (LBL7886) that you may personalize to your customers
■ a brochure (LBL7662) reminding customers of the life changes that may
increase their need for insurance
■ a worksheet (LBL7663) for them to fill out, helping them understand exactly
how much they need
You may choose to send this worksheet directly to them, or call them to set up an appointment to go through it together.
Have a conversation
while the Life insurance review worksheet (LBL7663) is a great place to start, you’ll also learn a lot when you sit down and start asking questions.
what’s going on in your customer’s life? whether there have been subtle changes or major ones, sometimes it’s easy for people to overlook their life insurance policies as their situations change.
Here are a few of the life-changing events that could trigger a need for a change in policy:
■ Income – Has your customer been promoted? Laid off? changed jobs? retired?
received an inheritance?
■ Family – Has there been a birth or an adoption? Has a child left home? are there
any grandchildren? are they caring for an elderly parent?
■ Home – Has your customer purchased a new home, or paid off a mortgage? ■ Charities – is there a particular charity that your customer wants to add or remove
as a beneficiary? Has your customer become involved in a new charity?
■ Marital status – Has there been a marriage or a divorce?
■ Health – Did your customer lose weight, quit smoking or have any other positive
changes in health recently? if so, they may qualify for a more favorable rate. Have there been any notable health problems?
■ Inflation – Has it been 10, 15 or even 20 years since reviewing or updating the
policy? if so, it may not provide adequate coverage by today’s standards.
■ Other policies – if your customer has other policies through work or another
insurer, ask to see the most recent annual statement. (Or, obtain it from the other insurance company with your customer’s permission.) are your customer’s overall goals being met? How much are they paying in yearly premiums? what is the current death benefit?
certain customers may require a more comprehensive look. Here are a few situations to watch for:
■ Young customers – Many of them have term insurance, but should they consider
a long-term policy?
■ Middle-aged customers – are they paying too much for adequate protection for
their families? should they look at policies that will help them build cash value?
■ Business owners – are they using their life insurance effectively, by using it to
handle continuation plans, benefit plans or key person coverage?
■ Trustees – are they exposing themselves to unnecessary liability and legal risk by
managing policies that are not their own?
Once you know your customer’s current situation completely, you can help determine how much life insurance is needed, how much they can afford, or if they’re already properly covered.
Talk about estate and business planning, too
evaluate and analyze
You have the big picture and all the details. now it’s time to determine whether your customer’s coverage is adequate, is lacking or is too comprehensive.
Reasons to consider maintaining the status quo
new contestable period
when a new policy is purchased, a new contestable period begins. Policies can be contested within the first two years after being issued in order to discover any material information that was not revealed on the application which would have affected the insurer’s decision to issue the policy. for replacements with the same insurer, some companies apply a new contestable period only for an increase in the amount of insurance.
existing loans
some policies offer favorable loan interest rates or wash loans after a policy has been in force for a specific period of time. in some situations, loans are not transferable from one policy to another. also, some insurers don’t recognize the transfer of a loan as a tax-free exchange, even if the receiving company can receive a loan.
new acquisition costs
new life insurance contracts contain sales charges and acquisition costs that must be recouped via the payment stream. The customer may have already paid these charges on older policies.
new suicide period
a new two-year suicide period may begin with a new policy.
Guaranteed crediting rates
There may be a higher guaranteed minimum interest crediting rate on an older policy.
surrender period
an existing policy may have already satisfied or nearly satisfied the surrender period. a new surrender period starts with a new policy.
special internal exchange rules
some insurers have special internal exchange rules that may apply if the policy needs to be changed.
change for the worse in underwriting status
in this case, it may be advantageous to pay additional premium into the existing policy to keep it in force.
Grandfathered policies
The laws and rules governing the taxation of life insurance policies change from time to time. existing policies may be grandfathered from various tax rules. for example, policies issued prior to June 21, 1988 may be grandfathered from the rules governing Modified endowment contracts (Mecs).
Reasons to consider exchanging a policy
secondary guarantees
some universal life products offer death benefit guarantees based on a fixed premium structure. The guarantee applies even if there is a sustained drop in interest rates or if the current cash value declines or disappears.
Lower mortality rate
improvements in medical science have increased life expectancy. Because of this, many new life insurance policies have lower mortality expenses than existing policies.
Loan treatment
under the 1035 exchange rules, the irs allows for the transfer of a loan along with the cash value from an existing life insurance policy to another life insurance policy, as long as the customer is the owner. some policies offer attractive loan interest rates that might not be available on an existing policy. (remember, loans and withdrawals reduce cash values and death benefits. surrender charges and taxes may also apply.)
More competitive plans
insurers are cutting expenses and distribution costs. when combined with other pricing improvements, it may lead to a much more competitive product, with lower costs and/or features and benefits not available on earlier plans.
Preferred/special underwriting
There are now additional classes of underwriting for universal life. customers may now fall into a better underwriting class and would benefit from lower mortality charges. Plus, if a customer has improved their health since their last policy was taken out, they may qualify for a different underwriting class.
extended maturity dates
Loan issues
One of the real benefits of universal life is the ability to withdraw a cash value up to the basis, tax deferred; then switch to loans, which are also tax deferred. if a policy lapses with an outstanding loan, the owner has ordinary income tax to the extent the outstanding loan exceeds the cost basis on the date of the lapse. Paying income tax at that time may be an unexpectedly large amount to the policy owner.
This situation may be avoided with policies that have no maturity date. They are designed to continue the death benefit as long as the insured lives. at age 100, most charges are discontinued and any cash value keeps accumulating at the current interest rate. if loans exist and the policy is not a Mec, no tax will be due as long as there is a positive cash value.
Discuss your findings
Give a balanced, objective overview of your customer’s situation, and discuss where they are, where they want to be and where they could be.
Current costs vs. benefits
Talk with your customer about their current situation and their existing policies. Go over the premiums being paid, the death benefits and the cash surrender values. Discuss the effects of inflation, and the length of time the policies have been in force. Give an assessment of whether you believe the coverage is adequate.
next, discuss the features and associated costs of these existing policies. ask which features the customer believes are absolutely necessary and why. Talk about whether these features are adding any cost to the customer.
Discuss which needs have changed, and if your customer requires more flexibility or cash accumulation potential than the current policy provides.
Review the in force reprojection
show your customer an accurate illustration of how a modification will work with their existing cash value, death benefit, death benefit options, rider information, age and more. You can show a reprojection with changes to the death benefit, the death benefit option or the premium.4
it’s very simple. when you’re viewing your customer’s policy details on accessallstate.com, select Generate a reprojection to download an illustration.
Change beneficiaries as necessary
Make sure the beneficiaries listed on your customer’s existing policies are current. if there are any complex situations, refer your customer to an attorney or tax advisor to avoid later complications.
Long-held policies
if your customer has had the same life insurance policy for 10 or 20 years, inflation will affect the policy’s value. for example, a $100,000 death benefit purchased in 1989 would be worth only $74,350 in today’s dollars.5
also, stagnant death benefits from older policies may not provide enough coverage due to changes in income and debt.
4 Increases in face amount require evidence of insurability.
Step 4
Present meaningful solutions
By this time, you know your customer’s life insurance coverage inside and out, and have a solid insight about what they should do. Your recommendation may be as simple as changing a beneficiary, adding a charity or applying a change in coverage.
However, you may conclude that your customer needs to replace6 their existing policy. if
that’s the case, you could include any or all of these products in your recommended plan:
■ Term – provides coverage for a specific period of time
■ Universal Life – offers flexible premium options and a death benefit
■ Fixed-Index Universal Life – works like universal Life, but with an option of
potential indexed interest based on positive changes in the corresponding index
■ Single Premium Universal Life – provides an immediate death benefit larger
than the premium payment, usually without income tax for the beneficiaries7
Explain the tax advantages
The good news for your customer is that most life insurance policies do have potential tax advantages. Policies grow tax-deferred, and the death benefits passed to beneficiaries are generally income tax free.
6 IMPORTANT INFORMATION REGARDING REPLACEMENTS: Lincoln Benefit Life does not encourage systematic or unsuitable replacement of existing life insurance. Careful comparison and analysis of all options is necessary to ensure that sales involving replacements are in the customer’s best interest.
7 Guarantees are based on the claims-paying ability of Lincoln Benefit Life. The death benefit of life insurance policies that were transferred for value may be subject to ordinary income taxes.
Life insurance reviews make
good business sense for you –
and your customers
This is a process that allows you to spend some time with your best customers. it’s a smart and impressive way to gain their loyalty and expand your business while helping your customers keep track of their own finances, making sure their coverage has kept up with their changing lives.
Don’t forget, this is also a great opportunity to ask your loyal customers for referrals. after spending time with you and listening to your informed recommendations, they should be glad to oblige.
start today!
This is the perfect time to get in touch with your
customers to do a Life Insurance Review. Get online at
accessallstate.com/LifeEssentials
for your marketing
NE, and is not intended to provide legal, tax or investment advice. Lincoln Benefit Life issues fixed and variable insurance products that are sold through agreements with affiliated or unaffiliated broker-dealers or agencies. Lincoln Benefit Life’s variable products are sold by registered representatives, investment advisors and agents or bank employees who are licensed insurance agents. ALFS, Inc., serves as principal underwriter of SEC-registered contracts for Lincoln Benefit Life. ALFS, Inc., and Lincoln Benefit Life are wholly owned subsidiaries of Allstate Life Insurance Company, Home Office, Northbrook, IL.
Product availability and features may vary by state.
Guarantees are based on the claims-paying ability of the issuing insurance company. Date of first issue: 5/09
FOR BROkER/DEALER OR AGENT USE ONLy. May not be quoted, reproduced, shown to members of the public, or used in oral, written or electronic form as sales literature for public use. © 2009 Allstate Insurance Company
