Media Center
The decision to purchase life insurance may be one of the most important financial decisions you will make. At its core, life insurance provides financial protection, a tax-free death benefit that offers your loved ones peace of mind through the legacy you leave behind.
But if you have permanent life insurance, such as whole life or universal life, you also own a long-term financial asset. Unlike term coverage, which ends after a specific period, permanent life insurance is designed to provide lifelong coverage as long as sufficient premiums are paid. It also builds tax-deferred cash value that can become part of your overall wealth strategy.
What often gets overlooked is that permanent life insurance requires active management.
It is not a one-time transaction. It is a long-term financial tool that should be regularly monitored with the same diligence you apply to your investment portfolio or retirement plans. Regular oversight helps ensure the policy benefits your loved ones when they need it most.
Why Strategically Monitoring Permanent Life Insurance is Essential
When your policy was issued, you likely received an illustration showing projected cash value growth based on assumed interest rates or market performance. However, this illustration is only a projection, not a guarantee.
As years pass, interest rates fluctuate. Markets rise and fall. Carrier expenses may change. All of these factors influence your policy’s performance, with cash value growing faster or slower than expected, and ultimately determine whether it will deliver the protection you expect.
You may assume that paying the scheduled premiums keeps your policy safe. But without periodic review, a policy that once appeared well funded can become underperforming or at risk of termination.
Here are four reasons why monitoring your permanent life insurance policy is essential.
Preventing Policy Lapse
Permanent life insurance can lapse if the cash value drops too low to cover internal costs and premiums. Even if you are paying the premiums, coverage is not always secure.
If performance falls short of projections, you may need to add funds to keep the policy in force. Identifying potential issues early allows you to make strategic adjustments now rather than reactive decisions later in life.
Tracking Performance in Changing Markets
In some types of permanent life insurance, cash value is tied to market performance or interest rates. During weaker markets, cash value growth can slow.
For example, consider a 1 million dollar policy that has accumulated 150,000 dollars in cash value. During a significant market downturn, such as the one in 2008, that value could decline rapidly and leave you with difficult decisions. You may need to increase premiums or reduce the death benefit in order to preserve the policy. Neither option is ideal.
Regular reviews with your broker can help determine whether performance aligns with your expectations and long-term goals. If not, early review gives you time to make adjustments.
Monitoring Unexpected Policy Fees and Internal Charges
Some permanent life insurance policies include internal expenses such as cost of insurance charges and administrative fees. These charges can increase over time and erode the cash value faster than expected.
Regular monitoring allows you to stay informed about your policy’s sustainability.
Adjusting to Life Changes
Your life today likely looks different than it did when you first purchased your policy. New mortgages, business interests, philanthropic goals or a growing family can all influence the level of coverage you need.
Regular reviews allow you to confirm that your policy continues to support your current financial goals and not just the assumptions from years ago.
How Your Broker can Help
You would not ignore your retirement accounts for decades and assume they will perform exactly as projected. Permanent life insurance deserves the same level of attention, and your broker can help keep you on track.
Your broker’s risk management team can provide a structured review every one to three years with updated illustrations showing best and worst case scenarios. These reviews help confirm the policy’s long-term sustainability.
Together, you can make informed decisions about whether to continue your current strategy or make adjustments. This helps ensure that when the policy is ultimately needed, it performs as intended.
Permanent life insurance can be a powerful financial tool for death benefit protection, business continuity and wealth transfer. But its value depends on active management and oversight. Paying premiums alone does not guarantee sustainability. Strategic monitoring does.
To learn more about life insurance policies and how to safeguard your legacy, visit our Personal Risk and Insurance Solutions page or contact us below:
Note: This communication is for informational purposes only, and is not intended to offer legal, tax, or client-specific risk management advice. Information in this communication is not meant to describe specific coverages that may be advisable or available to you or your company, or to interpret specific coverages that may already be in place. General insurance descriptions in this communication do not include complete insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis. View our privacy notice.
