Arcadia Bluffs, Michigan

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DISCOVERING OPPORTUNiTIES

by Mark Zichterman

One of the most gratifying parts of serving our clients is when we uncover an opportunity that the client didn’t know was there. Our clients are hard-working people, and I love when together we find ways to make their money go further than they thought possible.

Recently, I was working on a financial plan for a couple in their early 60’s.

A financial plan serves many purposes, like determining if someone is going to outlive their money. Or if they’ll have too much money (yes, this is a “problem” that needs navigating). We also discuss if their asset allocation is coordinating with their goals and net worth, and many other things. It’s a great time for us to talk about retirement, legacy, and health care concerns. We also ensure all assets are accounted for - as it’s impossible to get a picture of the future without first knowing what we have to work with.

This couple took our process to heart and provided a thorough picture. We found they had two life insurance policies. The first insured the husband’s life and provided a benefit to his wife should he precede her in death. The second was a “second to die” policy that provided a benefit to the estate after both husband and wife pass away. 

During our conversation, they shared concerns about future health care costs, specifically their potential need for long-term care. As we do in all life insurance cases, we did a policy review and came up with a solution to all issues: 

  • For the first policy, we recommended an exchange to a new policy, took the cash value from the existing policy, lowered the annual premium by about $1,000, and were still able to increase the death benefit by about 50%! And the kicker was: the new policy allowed the death benefit to be spent on long-term care during the life of the insured. So we were able to help our clients spend less money per year, raise their benefit, and move to a policy that addressed a chief concern: long-term care.
  • For the second policy we had similar success. The type of policy was not eligible for the long-term care benefit; however, we lowered the annual premium by about $1,000 once more, and nearly doubled the death benefit – an increase of about 90%.

We were able to lower their annual premiums, yet more than double their collective death benefit (without any extra money out of their pocket) and solve the long-term care concerns for the husband.

Life insurance evolves and mortality tables change, which provide opportunities that all investors should keep an eye on. It makes sense to regularly review your life insurance policies and while it won’t always turn out this way, you never know what opportunities you can discover.

 

Keep in mind every situation is different. Risks and rewards of a policy change must be considered. A policy change may not be appropriate for everyone. The experiences described here may not be representative of any future experience of our clients. Past performance is not indicative of future results. Information should not be considered a recommendation of the advisor's services or abilities, or indicate a favorable client experience. Individual results will vary.

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