Paul SanfilippoBrokerage DirectorContact Paul: Phone: (800) 823-4852 x8760 E-mail: psanfilippo@pinneyinsurance.com View...
Disclaimer:This material was not intended or written to be used, and cannotbe used, to avoid penalties imposed under the I...
Introducing…The PolicyAssessment               For financial professional use only. Not for client presentation.
Policy Assessment Agenda• The role of life insurance• Consumer Considerations:    Why? Then & Now, Change•   Technical Rea...
Policy Assessment Agenda• Ruling & Appeals• Insurance Valuation Services “IVS”• Client Interview• The Process:    Goals, P...
Why are Life Insurance Policies Purchased?• Provide survivor income• Ensure that debts are paid• Provide education for you...
As Consumer’s Lives Change,So should their Policies• What worked for them then,  may not work for them now• The course of ...
What Changes can Affect a Policy?• New family members?• New career?• Financial adjustment?  (More or Less Income?)• Health...
Top 10 Reasons ConsumersNeed a Policy Review1. Insurance Policy has not been     reviewed in the last three years.2.   Fin...
Top 10 Reasons ConsumersNeed a Policy Review6. Family or business situation      has changed7.    Health has changed      ...
The Industry Created the Problem!• Glass Steagall Act 1933• 30 yrs. of Deregulation  toward Repeal• Establishment of the  ...
The Industry Createdthe Problem!• Created Fierce competition• Commission Squeeze• Improved Technology  created efficiency•...
The Problem Forced Innovative Solutions!The changes in the Industry forcedinnovation of better Products:• Historically low...
The Problem Forced Innovative Solutions!• Increased Life Expectancy  due to Healthier Habits• Lower expenses result in  hi...
Why should you Care?• Policies may not perform as expected  “Bad investment Decisions”• Clients objectives may not be met•...
Rules & Regulations to FollowUniform Prudent Investor Act• Provides a safe harbor for those  acting in a fiduciary capacit...
Rules & Regulations to FollowCode of Federal RegulationsTitle 12 Sec. 9.6• Mandates requirements for   national banks deal...
Uniform Prudent Investors Rule• 1994 UPIA establishes standards for trustees managing  in managing trust assets• More than...
Stuart Cochran ILIT (901 N.E2d 1128 March 2, 2009 IN)• 1987 ILIT purchases a DB of $4,753,539• 1999 policy is exchanged fo...
Keys to the decision1.   The trustee hired an independent, outside     consultant2.   The consultant provided advice and t...
Insurance Valuation Services “IVS”• Insurance Valuation Company providing a  complete turnkey solution to help you manage ...
Insurance Valuation Services “IVS”• Insurance Valuation Company providing a  complete turnkey solution to help you manage ...
Insurance Valuation Services “IVS”                                                                                 •   No ...
The Client Interview• Why do you own this amount  of insurance?• Why did you buy this type of  insurance?• What was the pr...
The Client Interview• Do you have the appropriate type  and amount of insurance to meet  your primary goal?  (Cash accumul...
Goals of the Process• Educate the Policy Owner(s) about  life insurance and their policy.• Evaluate the Policy Owner(s) th...
Presenting A Process• Review changes in life insurance needs• Presentation   • Logical   • Easy to understand   • Provides...
The Assessment Will Examine• Policy performance• Policy design and function• Funding of the policy• Financial health of li...
The Assessment Will Examine• Lower cost guarantees• Surrender charges• Outstanding loans• New surrender charge period  may...
The Assessment Will Determine if:• A Policy is performing   • If existing policy is performing as expected or     better, ...
The Assessment Will Determine if:• You should Consider alternatives   • If appropriate, consider other solutions.   • Revi...
Trust, Integrity & Diligence• Conducting an insurance review  will build client trust• Having a system that is clear, easy...
Case Scenerio• George Client and Jean Client a Male,  age 65 and Female, age 66 own  a Survivor Life Insurance Policy• Pol...
Case Scenerio• Your stated policy objectives were used in  the compilation of this report.• When you completed the brief d...
For financial professional use only. Not for client presentation.
For financial professional use only. Not for client presentation.
For financial professional use only. Not for client presentation.
Case Scenerio Conclusion• Based on the comparative premiums,  underwriting, financial stability• Primary goal of Add/Incre...
Case Scenerio Conclusion• Recommendations: Move into UW with New Carrier  • Assume all additional underwriting    requirem...
The PA Kit Includes:• Advisor Brochure• Client Brochure• Client Work Sheet   • Authorization to Release of IFPL• Marketing...
The Client Brochure:• You can count on Change• What is a Policy Assessment• How It Works• The Process• The Potential Outco...
The Advisor Brochure:• The Problem• What is a PA• Piece of Mind• Examples of Potential Issues• How it Works• View Sample (...
The Worksheet:• Printable OR Fillable• Client Information• Policy Objectives• Medical History• Ownership Information• Auth...
Sample Report:• Purpose of Assessment    (Evaluate Changes)•   Who Conducted the Assessment    (IVS)•   Executive Summary ...
Sample Report:• Policy Performance Assessment    Current Funding Commitment    Guaranteed & Non-Guaranteed     Assumptio...
Ask yourself 2 Questions• What is your best written case?  • This is a fiduciary tool to ensure that his policy is    meet...
Both of these 2 situations       could be yourfirst 2 Policy Assessments                         For financial professiona...
Next Steps…• Schedule meeting to meet with    your client•   Gather information needed•   Authorization letter signed•   P...
Important Contact Information CLQ                www.WholesaleInsurance.net EZLife Sales       www.EZLifeSales.com Sale...
Thank you!      For financial professional use only. Not for client presentation.
Life-Insurance-Review
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Life-Insurance-Review

  1. 1. Paul SanfilippoBrokerage DirectorContact Paul: Phone: (800) 823-4852 x8760 E-mail: psanfilippo@pinneyinsurance.com View Paul’s Biography For financial professional use only. Not for client presentation.
  2. 2. Disclaimer:This material was not intended or written to be used, and cannotbe used, to avoid penalties imposed under the Internal RevenueCode. This material was written to support the promotion ormarketing of the products, services, and/or concepts addressed inthis material. Anyone to whom this material is promoted, marketed,or recommended should consult with and rely solely on their ownindependent advisors regarding their particular situation and theconcepts presented here. For financial professional use only. Not for client presentation.
  3. 3. Introducing…The PolicyAssessment For financial professional use only. Not for client presentation.
  4. 4. Policy Assessment Agenda• The role of life insurance• Consumer Considerations: Why? Then & Now, Change• Technical Reason Problems Occur• Industry Problem• Product Enhancement• Advisor/Agent Concerns• Rules & Regulations• Uniform Prudent Investor Act “UPIA” For financial professional use only. Not for client presentation.
  5. 5. Policy Assessment Agenda• Ruling & Appeals• Insurance Valuation Services “IVS”• Client Interview• The Process: Goals, Presenting, Examine, Determine• The Trusted Advisor• Case Design• The Kit• 2 Clients you need to Consider• Next steps For financial professional use only. Not for client presentation.
  6. 6. Why are Life Insurance Policies Purchased?• Provide survivor income• Ensure that debts are paid• Provide education for your children• Protect your business• Reward key employees• Supplement retirement income• Preserve your assets• Minimize Taxes• Create a legacy For financial professional use only. Not for client presentation.
  7. 7. As Consumer’s Lives Change,So should their Policies• What worked for them then, may not work for them now• The course of time may change each client’s needs• Are your client’s needs being met? For financial professional use only. Not for client presentation.
  8. 8. What Changes can Affect a Policy?• New family members?• New career?• Financial adjustment? (More or Less Income?)• Health Changes? (Quit smoking, lost weight?)• Bought a new home?These in addition to any other life changeswill require a policy review to ensure yourclient’s needs are being met sufficiently. For financial professional use only. Not for client presentation.
  9. 9. Top 10 Reasons ConsumersNeed a Policy Review1. Insurance Policy has not been reviewed in the last three years.2. Financial goals may have changed3. Life insurance needs have increased or decreased4. Ownership is structure has changed5. Beneficiary designations For financial professional use only. Not for client presentation.
  10. 10. Top 10 Reasons ConsumersNeed a Policy Review6. Family or business situation has changed7. Health has changed (may qualifying for a better rating)8. Is the policy cost-effective?9. Loans, withdrawals, or other policy changes have affected the policy’s performance10. Payment of premiums have been inconsistent For financial professional use only. Not for client presentation.
  11. 11. The Industry Created the Problem!• Glass Steagall Act 1933• 30 yrs. of Deregulation toward Repeal• Establishment of the Gramm-Leach-Bliley Act• Demutualization of Mutual to Stock Companies• Mergers and Acquisitions For financial professional use only. Not for client presentation.
  12. 12. The Industry Createdthe Problem!• Created Fierce competition• Commission Squeeze• Improved Technology created efficiency• MGA, BGA, IMO, FMO Growth• Online Retailers of term Insurance• Social Media “31%” For financial professional use only. Not for client presentation.
  13. 13. The Problem Forced Innovative Solutions!The changes in the Industry forcedinnovation of better Products:• Historically low investment returns• Interest Rates have declined• Underlying Investments have not performed• Mortality tables have changed significantly For financial professional use only. Not for client presentation.
  14. 14. The Problem Forced Innovative Solutions!• Increased Life Expectancy due to Healthier Habits• Lower expenses result in higher death benefits• Lower Expense result in lower premium outlays• Easiest to see in term insurance For financial professional use only. Not for client presentation.
  15. 15. Why should you Care?• Policies may not perform as expected “Bad investment Decisions”• Clients objectives may not be met• Negligence in Administration, Design & Disclosure• Litigation for those who are “part of the process” including: • Life Insurance Agent • Attorney • CPA • Trustee • Advisor For financial professional use only. Not for client presentation.
  16. 16. Rules & Regulations to FollowUniform Prudent Investor Act• Provides a safe harbor for those acting in a fiduciary capacity.• “Invest and manage trust assets as a prudent investor would… exercise reasonable care, skill, and caution” For financial professional use only. Not for client presentation.
  17. 17. Rules & Regulations to FollowCode of Federal RegulationsTitle 12 Sec. 9.6• Mandates requirements for national banks dealing with trusts assets, including life insurance• Reviews: Pre-acceptance, post-acceptance, ongoing annualInvestment Policy Statement (IPS)• Creation For financial professional use only. Not for client presentation.
  18. 18. Uniform Prudent Investors Rule• 1994 UPIA establishes standards for trustees managing in managing trust assets• More than 45 states have adopted this Act• Investment cannot be determined on a stand-alone-basis include ILIT’s• ILIT trustee’s are fiduciaries act in the best interest of the trust’s beneficiaries • Must Diversify, Monitor, & Review • Risk and Return must be considered • May delegate responsibilities (Skilled vs. Unskilled) • 5 states –DE, WV, ND, WY, PA For financial professional use only. Not for client presentation.
  19. 19. Stuart Cochran ILIT (901 N.E2d 1128 March 2, 2009 IN)• 1987 ILIT purchases a DB of $4,753,539• 1999 policy is exchanged for two VUL polices od $8,000,000• After major loses in 2003, Trustee hires outside, independent consultant to review policy• Consultant recommended further monitoring, due to potential lapse prior to mortality• Selling Agent proposes surrendering policy and purchasing a new policy of $2,536,000 & the consultant agreed• Trustee Surrenders the policy ($108,000 charge)• Insured dies soon after at age 53 and receives DB of 2.5 Million• ILIT Beneficiaries sue trustee for breach of fiduciary duty• Judgment for Trustee (PRUDENT) and ILIT beneficiaries Appeal For financial professional use only. Not for client presentation.
  20. 20. Keys to the decision1. The trustee hired an independent, outside consultant2. The consultant provided advice and the trustee followed it.3. The trustee “examined the viability of the policy and at least one other option4. UPIA Statute “Hindsight should not be used to judge the actions of the trustee; only the facts existing on the date of the decision are relevant.”5. Opinion provides guidance of minimum standards of conduct and fiduciary duty. For financial professional use only. Not for client presentation.
  21. 21. Insurance Valuation Services “IVS”• Insurance Valuation Company providing a complete turnkey solution to help you manage the complexities of Life insurance.• Comprised of Attorney’s, Tax Professionals and Analysts.• Provides a totally objective and unbiased service• Services allow you to focus on growing your business and strengthening the relationship with your clients For financial professional use only. Not for client presentation.
  22. 22. Insurance Valuation Services “IVS”• Insurance Valuation Company providing a complete turnkey solution to help you manage the complexities of Life insurance.• Comprised of Attorney’s, Tax Professionals and Analysts.• Provides a totally objective and unbiased service• Services allow you to focus on growing your business and strengthening the relationship with your clients. For financial professional use only. Not for client presentation.
  23. 23. Insurance Valuation Services “IVS” • No Contract• Typical Pricing in the market place • 1 policy minimum • Policy Review - A stand-alone, non-biased Policy • $250Paid in Review that is delivered to you electronically. Advance • Portfolio Report - Executive Portfolio Report that • No Contract includes a Market Analysis • No policy minimum/maximum • Policy Remediation - in-depth policy analysis, review • $150 - $500 of goals, objectives in-depth policy analysis, review Invoiced of goals, objectives and suitability, request additional Separately illustrations, create and distribute disclosure • No Contract statements, acknowledgement forms and market • 1 case minimum analysis. Draft correspondence & conduct telephone • $500 briefings • Standard Remediation • Complimentary service to PINNEY Insurance Agents Package For financial professional use only. Not for client presentation.
  24. 24. The Client Interview• Why do you own this amount of insurance?• Why did you buy this type of insurance?• What was the primary purpose for buying this insurance? (supplementing retirement, family security, college funding, tax planning)• How much insurance will be in-force when needed? For financial professional use only. Not for client presentation.
  25. 25. The Client Interview• Do you have the appropriate type and amount of insurance to meet your primary goal? (Cash accumulation vehicle or Death benefit — maximum death benefit)• Retaining term beyond conversion period: - Does this make good economic sense? - What happens if your underwriting status changes? - Can you re-qualify for the lower rates? - Is the need for coverage temporary or longer term? For financial professional use only. Not for client presentation.
  26. 26. Goals of the Process• Educate the Policy Owner(s) about life insurance and their policy.• Evaluate the Policy Owner(s) the present situation of the policy and the Performance of the policy going forward.• Present to the Policy Owner(s) the possible alternatives in the marketplace that can provide enhanced features and benefits. For financial professional use only. Not for client presentation.
  27. 27. Presenting A Process• Review changes in life insurance needs• Presentation • Logical • Easy to understand • Provides: – Real Numbers – Real Analysis – Real Alternatives For financial professional use only. Not for client presentation.
  28. 28. The Assessment Will Examine• Policy performance• Policy design and function• Funding of the policy• Financial health of life insurance carrier• Health status of insured• New underwriting and medical exam• New contestability and suicide clause periods For financial professional use only. Not for client presentation.
  29. 29. The Assessment Will Examine• Lower cost guarantees• Surrender charges• Outstanding loans• New surrender charge period may lower cash values For financial professional use only. Not for client presentation.
  30. 30. The Assessment Will Determine if:• A Policy is performing • If existing policy is performing as expected or better, and needs have not changed. • You are finished for now, and • Continue to review periodically to be sure policy is on course.• A Policy is not performing • If existing policy is not performing as expected, or if needs have changed: • Determine a premium increase or decrease required to reach the goal. • Work with the client to correct the situation For financial professional use only. Not for client presentation.
  31. 31. The Assessment Will Determine if:• You should Consider alternatives • If appropriate, consider other solutions. • Review additional insurance coverage options with your client. • Explain why additional coverage may be suitable. Share illustrations with the client to help them make the decision. For financial professional use only. Not for client presentation.
  32. 32. Trust, Integrity & Diligence• Conducting an insurance review will build client trust• Having a system that is clear, easy to understand, and educates will restore faith in a clients ability to meet their objectives• Implementing a process unilaterally provides a high standard of suitability and fiduciary control. For financial professional use only. Not for client presentation.
  33. 33. Case Scenerio• George Client and Jean Client a Male, age 65 and Female, age 66 own a Survivor Life Insurance Policy• Policy was originally obtained in 1993.• Their current health appears to be Standard Non‐smoker and Standard Non‐smoker based on information provided on the Policy Assessment worksheet.• An Pre-underwriting review was conducted using insurance company published underwriting criteria. For financial professional use only. Not for client presentation.
  34. 34. Case Scenerio• Your stated policy objectives were used in the compilation of this report.• When you completed the brief data sheet at the beginning of the Policy Assessment process, you stated the two most important factors to consider during our evaluation were: • Primary Objective: Add / Increase Benefits • Secondary Objective: Cost / Premium Reduction• All recommendations provided are intended to maximize one or both of these goals and to help you achieve your desired outcome in the most effective and efficient manner. For financial professional use only. Not for client presentation.
  35. 35. For financial professional use only. Not for client presentation.
  36. 36. For financial professional use only. Not for client presentation.
  37. 37. For financial professional use only. Not for client presentation.
  38. 38. Case Scenerio Conclusion• Based on the comparative premiums, underwriting, financial stability• Primary goal of Add/Increase Benefits based on current premiums, the New Carriers Survivor Life policy for $4,511,376 at a premium of $20,000• Secondary Objective: Cost / Premium Reduction $0 outlay, the New Carrier Survivor Life Policy for $3,027,828• Current policy requires an increase in premium to $37,276 to maintain coverage on a guaranteed basis to age 100. For financial professional use only. Not for client presentation.
  39. 39. Case Scenerio Conclusion• Recommendations: Move into UW with New Carrier • Assume all additional underwriting requirements are within the New Carriers "Standard Nonsmoker“ health class. • Assumes a 1035 exchange of $661,623. • Current policy has a Cash Surrender value of $661,623. For financial professional use only. Not for client presentation.
  40. 40. The PA Kit Includes:• Advisor Brochure• Client Brochure• Client Work Sheet • Authorization to Release of IFPL• Marketing Letters• Fax Cover Sheet• Folder (Optional) For financial professional use only. Not for client presentation.
  41. 41. The Client Brochure:• You can count on Change• What is a Policy Assessment• How It Works• The Process• The Potential Outcomes• Why Perform an Assessment?• What does it analyze?• Insurance Valuation Services• View Sample (Online) For financial professional use only. Not for client presentation.
  42. 42. The Advisor Brochure:• The Problem• What is a PA• Piece of Mind• Examples of Potential Issues• How it Works• View Sample (Online) For financial professional use only. Not for client presentation.
  43. 43. The Worksheet:• Printable OR Fillable• Client Information• Policy Objectives• Medical History• Ownership Information• Authorization to Release• View Samples: (Online) 1. Printable 2. Fillable For financial professional use only. Not for client presentation.
  44. 44. Sample Report:• Purpose of Assessment (Evaluate Changes)• Who Conducted the Assessment (IVS)• Executive Summary (Recommendations)• Special Considerations• Client & Policy Overview (Objectives & Ownership)• View Sample (Online) For financial professional use only. Not for client presentation.
  45. 45. Sample Report:• Policy Performance Assessment  Current Funding Commitment  Guaranteed & Non-Guaranteed Assumptions  In-force Ledgers and Market analysis• Summary of Alternatives (Primary & Secondary)• Financial Stability Review (Carrier)• Conclusion & Recommendations (Options, Next Steps)• View Sample (Online) For financial professional use only. Not for client presentation.
  46. 46. Ask yourself 2 Questions• What is your best written case? • This is a fiduciary tool to ensure that his policy is meeting the intended objectives. • It is also an advocacy process that can lead to referral conversation.• Who is your worst client? • Is this the client that would be the most likely to sue you? • Do you want to have some compliance between you and this situation? For financial professional use only. Not for client presentation.
  47. 47. Both of these 2 situations could be yourfirst 2 Policy Assessments For financial professional use only. Not for client presentation.
  48. 48. Next Steps…• Schedule meeting to meet with your client• Gather information needed• Authorization letter signed• Pinney/IVS will develop the presentation• Schedule meeting to review For financial professional use only. Not for client presentation.
  49. 49. Important Contact Information CLQ www.WholesaleInsurance.net EZLife Sales www.EZLifeSales.com Sales Tools www.PinneyInsurance.com Pinney Platforms www.PinneyPlatforms.com800-823-4852 x8760 For financial professional use only. Not for client presentation.
  50. 50. Thank you! For financial professional use only. Not for client presentation.
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