Everyone should do an annual review of their life insurance policy. You have probably heard this advice before, or even read articles about it. You have likely never heard anyone disagree with that advice either. But do people actually follow it?

A survey done last year by the life insurance industry found that 34% of respondents said that they had had their policy so long that they didn’t even remember why they got it in the first place. (1) Clearly, they are not doing annual reviews.

Product Specialist Annual Reviews
While some insurance specialists do not offer any further services once they have earned their commission, most are happy to meet with their clients for a review. It is always a good idea to review your investments, and life insurance is no different.

When you review your insurance policy with a product specialist, he or she will look at how your needs have changed and how they compare to your current policy. You will discuss whether or not your current policy meets your current and forecasted needs and what changes or additional insurance you may need. Do you need additional riders such as long-term care and chronic illness? Does a longer life expectancy affect your insurance needs? How have your goals changed?

What We Cover In Annual Insurance Reviews
The questions in the previous section are very good questions to address, but we at Wealth Management Solutions, LLC tend to look at it differently. Instead of using your current policy as a base to build off of, we take a step back and look at the bigger picture. Unlike insurance specialists, whose job it is to sell insurance, we ask the question: Do you even need insurance in the first place?

Sometimes, insurance is not the most efficient use of your money. Some people have the means to self-insure and do not even need insurance. Since we are independent advisors, we have the freedom to ask these questions in order to do what is truly in the best interest of our clients. You can save a lot of money by cutting out unnecessary insurance premiums and redirecting that money to more profitable investments.

However, many people really do need life insurance. Performing an annual policy review can still save you money. Was your insurance policy designed using smart money options? We will review your policy design and how you pay your premiums. There are a number of options available, and you may find some hidden savings.

Also, does your insurance policy cover you for more than your death or debt? We will do an in-depth analysis of your true insurance needs by looking at your total financial picture. Debt and funeral expenses are only the beginning when determining insurance needs. Other things to consider are your spouse’s retirement and career goals, your children’s education, and the legacy you wish to leave.

Where Are You Getting Your Advice?
With insurance, as with everything in life, it is important to consider where you get your advice. First, you need to understand how insurance companies make money. There are two main ways: by collecting more in premiums than they pay out in claims and by investing the money they collect in premiums. Insurance companies make a lot of their money by simply investing your money and keeping the profits.

Second, you need to understand how the person selling you insurance makes money. Insurance products are sold on commission and the commissions vary by product. Therefore, the salesperson earns more money for selling you certain products over others. They can choose which products to sell based on how they benefit from it financially.

Insurance salespeople are not required to act in your best interest. They are agents of the insurance company, which means that legally their loyalty lies with the insurance company. While many do act in the best interest of their clients, they are not fiduciaries and thus not legally required to do so.

As independent advisors, however, we at Wealth Management Solutions, LLC are fiduciaries and are legally required to act in the best interest of our clients. As such, when you perform an annual insurance review with us, you know that our advice is not motivated by commissions, but rather by doing what is best for you. If you are due for your annual life insurance review, give us a call at (949) 475-9700 or email info@wms-llc.com for an unbiased, expert review.

About Richard
Richard Riva is the founder of and wealth advisor at Wealth Management Solutions, LLC, an independent financial services firm based in Newport Beach, California. For more than two decades, he has specialized in managing the complex financial matters that affect high-net-worth individuals and their families. He strives to serve as a trusted advisor and fiduciary, helping clients build a strong financial plan that allows them to live a confident, complete and distinctive life. Learn more about Richard by connecting with him on LinkedIn or emailing info@wms-llc.com.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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(1) https://www.bestliferates.org/blog/2017-life-insurance-statistics-and-facts/