Is It Time For Your Insurance Audit?
An effective insurance plan goes beyond merely maintaining your Life Insurance policy in a filing cabinet to gather dust until it is eventually needed. It requires attention and periodic updating as your circumstances and needs evolve.

At ZLC Financial we are happy to guide you through this process and help you navigate the various elements to consider in order to ensure you are fully and appropriately covered at all times. An insurance audit is an opportunity to review your overall financial plan and identify any gaps in your coverage resulting from possible life-changing events such as marital status changes, employment transition or new additions to your family. The review is done so you can take comfort knowing your financial plans are current and specifically customized to your particular circumstances, while always being sufficient to meet your criteria, aligned with your priorities, and in accordance with your objectives.

A comprehensive audit should review the following:

  • Is the total death benefit of your life insurance appropriate for your needs? A current capital needs analysis can help to determine this.
  • If your current coverage is renewable term insurance, should the policy be re-written before it renews to avoid a substantial increase in cost? Premiums for new coverage can be significantly lower than the renewal premium of an existing policy.
  • Is your need for life insurance permanent? If that is the case, you should ensure you have at least some of your needs covered by a permanent plan.
  • Are you nearing the end of the conversion period on your term policy? If yes, this may be the time to consider converting to permanent insurance.
  • Is your disability protection in place consistent with your current income? If you have changed jobs, does new group coverage impact your personal plan?

In addition to reviewing your policies, this is also a good time to consider the performance and competitiveness of the insurance company issuing the coverage – again, an area where ZLC Financial can provide you with objective advice and expertise. Every Insurance company has their areas of strength and focus – are you with the right one for your particular needs? An Insurance Policy is a contract, and sometimes significant differences occur from one policy to another merely by subtle nuances in the terms. Let ZLC Financial guide you through the myriad of nuances that could potentially be overwhelming if you are not familiar with all the types of coverage available.

If you have permanent insurance in place, you should review the following:

  • If your policy is a Universal Life policy with cash value, are the investment options still appropriate to market conditions and/or your risk tolerance?
  • If the policy is a Whole Life policy are the dividends adequate to now fund the premium, should you wish to take a premium holiday?
  • If your policy was assigned to a lender as collateral for a loan and that loan has been repaid, make sure the assignment has been removed.

Does your existing policy qualify for a reduction in premium?

  • If you have you stopped smoking, you may qualify to have the premiums reduced to those of a non-smoker.
  • If your policy was issued with a sub-standard extra premium and your health has improved, you may qualify to have the rating removed.
  • If your policy was rated as a result of participation in hazardous activities (e.g. flying, mountain climbing, heli-skiing), this rating can be removed if you no longer are active in these activities.

If the current policy is for business purposes, the following should also be reviewed:

  • If the policy was to fund a Shareholders’ Agreement or Partnership Agreement, does the amount and type of coverage still satisfy the terms of the agreement?
  • Are the ownership and beneficiary provisions of the policy still valid for Capital Dividend Account planning?
  • If the shareholder has retired, is there still need for the insurance?

Time has a way of flying by and things like insurance planning and estate planning often tend to end up on the back-burner. Reviewing your coverage on a regular basis is recommended and if it turns out that you remain properly covered after the audit, then it is time well spent to ensure your peace of mind and financial security.

Because each individual’s circumstances are unique, and often involve complex or technical assessment of options available, it is important to review your particular needs with a qualified financial professional. This is where ZLC Financial is here to help! Meet with a member of our team to learn more or get started.

Disclaimer: This article has been prepared for use by ZLC Financial. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with a ZLC Financial Associate. Neither the firm nor the author of this publication accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein.

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