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How Policy Reviews Will Help Your Clients (and Business)

September 2020

By: Matt Meyer

What is a policy review? Our definition of a policy review is reviewing clients existing insurance policies. Insurance policies can include, life, annuity, long-term care, auto, liability, and homeowners. Many of the advisors we speak with shy away from providing policy reviews or will only help when clients ask. We believe policy reviews provide the advisor a tremendous opportunity to provide real value and service to clients. We believe this added value can help differentiate an advisor in the face of client fee compression as well as help them discover new opportunities. You may like the sound of all that but are fearful of the work or complexity involved. The good thing is that it does not need to be cumbersome. Here are some ideas to consider.

Why are they important?

What do most people do when mortgage rates drop? They review their existing mortgage terms and consider refinancing or confirm what you already own is still right for their situation. They look at things like the duration, payment and rate. A policy review is a similar process. It is important to review the terms of your policies every couple of years. You will review items like the costs, coverage, and how it fits into your overall plan. This process will potentially help reducing costs and issues later.

Where do you start?

If you are new to this process, we suggest you start small.

1.  If you do not want to review the policies yourself, partner with a life specialist and property and casualty specialist. This will ensure you are prepared to handle whatever type of policy comes back to you.

2.  Identify 3-5 clients that you want to provide the service to. We usually suggest business owners, clients with a high net worth and people with families. These are typically the groups that have policies in place and will appreciate the review process.

3.  Contact the client and ask for a current statement, policy, or in-force illustration. The path of least resistance is usually the best starting point. A current statement can be a great starting point and you can request a policy or in-force illustration if necessary, later.

4.  We recommend you provide the client with a simple report summarizing the review. Create a simple template that outlines the important aspects of the review. This also allows you to easily save the review and it will make future reviews easier.

Once you get comfortable with this simplified process you can consider getting more detailed in subsequent reviews. We have some firms that have built the review process into their annual reviews, have clients upload current statements to their vault or portal, and have made their overall process more in-depth. Getting to this level is easier once you have seen the success and impact of the simplified process.

Treat Them Like Part of The Portfolio

We specialize in life insurance, so we have seen firsthand the consequences of policies lapsing leaving no coverage or lack of performance of the policy because of higher built in costs or increased costs unnoticed. The aspect of agents selling a policy and leaving the client to trust its performance rather than monitoring it over time just as any portfolio asset is irresponsible. This provides a great opportunity for a thoughtful financial advisor. A thoughtful advisor understands the importance of treating these types of policies like part of the portfolio. Just as it would not be prudent to ignore parts of the client’s investment portfolio, the same holds true for insurance policies. Hence policy reviews should go together with portfolio or regular client reviews. Once you start this process it becomes second nature.


If you would like us to help you with a policy review, please click here.