What To Advise Senior Clients With Existing Life Insurance
During estate plan reviews of senior clients, they will often ask, “What should I do with my existing life insurance?”
This insurance may have been purchased years ago for any number of reasons, such as childrens education, survivor income, estate liquidity, etc.
Whenever I hear this question, I respond (as attorneys are apt to do) with a question of my own: “What is the purpose of the insurance?” This is the question I most often ask, whether discussing the issue with the client, the insurance agent or any other advisors.
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That would appear to be a basic questionone that people expect to answer before proceeding much further in the discussion of protection strategies.
However, you may be surprised to learn that sometimes neither the agent nor the other advisors know the answer. Fortunately, though, most senior clients usually can recall the reason they bought the coverage.
Typically, the discussion turns up one of three alternatives: The original purpose still applies; the nature of the need has changed; or the original purpose no longer exists.
If the original purpose still applies, then the discussion turns to the life insurance itself and whether the agent thinks that the existing policy meets the clients needs. This is the agents turf, and I prefer to stay out of that discussion except to discuss generalities, like the difference between term and permanent coverage.
If the nature of the need has changed, then we discuss how to meet the new need. This may involve a change in the type of insurance, as well as in design of the estate plan.