Hi. I’m Mark Pace, Principal with ObjectivEdge, an insurance asset management consulting firm.
The #1 thing I want advisors to be thinking about is that Life Insurance is not a passive asset. 90% of all life insurance sold in the last 30 years is NOT performing as originally expected. However, we have found that only 25% of these policies merit "replacement," termination, or settlement. Most currently non-performing policies should not be replaced ... because they can often be remediated more successfully than subjecting the client to new fees, loads, surrender charges, and possible diminished returns and/or performance. This result is only possible when applying actuarially-derived tools, techniques and systems - independent of carrier illustrations and non-guaranteed pricing assumptions implemented by competently trained financial professionals. The financial planner is uniquely positioned to fulfill this role.
The perfect storm of reduced industry revenue and increasing policy charges will produce an unprecedented wave of policy crashes. Guaranteed death benefit policies have been all the rage for the last 10 years, but carrier revenue doesn't begin to support these policies in the long-term. While not being able to change pricing on the in-force "block" of such policies, it's anticipated that all current assumption policies (UL, VUL, EIUL) will experience increases in cost of insurance and other expenses - subject to the maximums imposed by the underlying policies. Most consumers and financial professionals have been unaware of the lifetime re-pricing possibilities carriers have contractually reserved for future profit management. Concerned financial planning professionals are ideally positioned to advise clients with proper training and Life Insurance Property Management independent analytical tools.
Whole Life insurance - for lifetime needs - has gained renewed respect as an uncorrelated asset class within an investment portfolio's fixed return allocation. Further, larger needs and policies (typically greater than $5 million) can be optimized into a portfolio of policies with techniques that not only can but SHOULD be applied to the acquisition and asset management of life insurance.
To learn more, visit my website, www.objectiview.com. I also invite you to visit my colleague Dick Weber's website, www.ethicaledgeconsulting.com