Ten Most Common Life Insurance Problems and How to Fix Them

  • Policies are left unchecked for years without an update. Solution: Conduct an in-depth review at least every 2 to 3 years to make sure the policy is still relevant, beneficiaries are correct, and that the insurance covers the changing needs of your family.

  • Life insurance doesn't match the insured's current needs. Solution: Suggest a new type of policy, such as term insurance, universal life, fixed-index universal or single premium universal life. Review various reasons why a change in your policy is necessary with your agent. Discuss possible changes in new premiums or fees.

  • There are no back up beneficiaries named in case the primary beneficiary dies before the policy owner.
    Solution: Make sure you name at least one beneficiary, and possibly two, just to make sure proceeds do not get tied up in the estate. In some cases, choosing a favorite charity as the beneficiary may be a good idea.

  • Insured's coverage is not adequate to meet the insured's financial or estate planning goals.
    Solution: Perform a thorough analysis of your customer's assets and determine the needs of the beneficiaries. Provide solutions to improve financial security.

  • The dead benefit is payable to minors, handicapped, emotionally immature, or financially irresponsible beneficiaries.
    Review policy where there are options to define how the death benefit is paid out, or work with an attorney to set up a trust for the beneficiaries using the current policy.

  • One person, The Insured, owns all of the policy Solution: If the insured owns the life insurance, it may be subject to estate tax. This is a good time for the insured to work with their tax advisor or an attorney to discern the best way to ensure that the policies' ownership is structured to minimize estate taxes.

  • There is the potential that the insured's business can provide insurance more cost and tax efficiently than the insured himself.
    Solution: Analyze the advantages and disadvantages of the various types of plans available. Then consider how to maximize business sponsored life insurance benefits.

  • Individual and group term insurance will terminate after 10 or 15 years and/or become prohibitively expensive to continue.
    Consider permanent life insurance options with your agent, or attorney periodically to determine the best possibility for financial needs in the future.

  • Policy owners consider their life insurance policies to be a commodity. Solution: Policyholders must work with their agent, or advisor to keep up to date on any changes or new laws that may affect their coverage. Schedule a policy review on a regular basis maintain contact with your insurance carrier to make sure have the most current information.

  • The insured's estate is named as the only beneficiary. Solution: Make sure that your beneficiaries are up to date, and that the names of these beneficiaries are included on the primary and contingent section of the policy.


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