by: Mark D. Milbrod, CLU, CLTC-September, 2019


As we enter the last quarter, we are all thinking about how our sales year will end. Will I finish strong? Will I hit my goals, etc.? In an effort to bolster activity for year end, as well as giving us momentum into the new year, Policy Audits are probably the greatest source of generating instant client engagement and lead the path towards new sales.

The best thing about conducting policy audits is that the clients are already buyers of insurance products. When reviewing policies, we need to be looking at many things such as:

  • Health Changes
  • Underperforming contracts
  • Needs changing
  • Ownership & Beneficiary Issues
  • Life changing events

Health changes can be a huge source of policy audit activity. Perhaps a policy was issued many years ago when there was a negative health event that was close to the time of the issuance of a policy that resulted in a sub-standard rating. For example, we recently completed a case where a replacement was made on a policy that was issued 8 years ago on a 61-year-old who had been rated Table 4 due to a cardiac event that took place 3 years before the original policy was issued. Now, 11 years past that event, and with stability, that same insured was issued with Standard rates. By utilizing a 1035 Exchange, premiums were lowered significantly and full guarantees to age 121 were achieved. These types of scenarios happen all the time. Sometimes they are as simple as uncovering an insured with smoker rates that has since stopped smoking.

One of the largest areas of opportunity that we see through Policy Audits are through life changing events. Older life insurance policies were purchased for different reasons (i.e. Income replacement, college planning, etc.). In many cases, the original need for the life insurance has diminished or gone away all together. In these situations, we are transitioning into the Long Term Care conversation.

These older policies, many of which have significant cash value, are being repurposed via 1035 exchanges into either income annuities and/or Hybrid Life-LTC policies. This type of transaction often uncovers the necessary funds to help protect against the threat of a long term health event.

Although the Policy Audit technique is an excellent way to work with existing clients, it is also a great way to open doors with new prospects. Asking them for the opportunity to review their existing coverage is an effective way of breaking the ice with those new prospective clients. In addition, it is also a way to get referrals from CPA’s, Attorneys and Trust Officers.

Either way, don’t sell the Policy Audit short. The process will undoubtedly increase client activity, which in turn, will lead you to many new sales for year end and beyond.



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