Policy Audit

Policy Audit

  • December 22, 2020

Story Description

The Life Insurance Audit: It may be time for a checkup

Unfortunately, many people believe that life insurance is something that, once purchased, you can set it and forget it. This is usually not the case. Over time, not only do the newer life insurance policies change in both design and internal cost structure, but we also find that one’s personal financial and health status have also changed. Our proprietary MyLifeAudit process allows us to analyze each aspect of our clients’ previously purchased life insurance policies to determine if a change should take place.


A gentleman asked us to review his older $5 million life insurance policy that he had previously purchased for a premium of $50,000/year. Since his estate had now grown quite a bit, it was suggested by his current agent that he needed an additional $5 million policy for tax purposes with an additional premium of $50,000/year. He asked us to help him determine the most cost-efficient way to acquire it.


After a few further discussions with both him and his attorney, we all agreed that a review of his current policy through our formal MyLifeAudit process would provide us with the information we needed. In addition, his past and continued success in business and real estate, along with his current health condition no longer being medically relevant, as his original policy was over ten years old, created an opportunity to improve his insurability and utilize a leveraged strategy that was not available to him in the past.


In this circumstance, our insurance policy review and audit produced some exceptional results. We were able to increase his overall insurance portfolio to the desired $10 million death benefit for the same $50,000 he was previously paying for many years on only $5 million of life insurance. In addition, and with the help of his lawyer, we were able to move this new $10 million policy out of his taxable estate, which had been previously ignored by his original life insurance agent, saving his family approximately $4 million in tax that would be paid upon his death in the future.