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Uncover Planning Gaps with Beneficiary Reviews

When most people hear the words beneficiary review, the obvious thoughts run through their minds:

  • Did I remember to add my youngest child as beneficiary to my insurance policy?
  • I just got divorced and need to remove my spouse as beneficiary.
  • I need to add my new grandchild as a contingent beneficiary.

Of course there are countless other scenarios but you get the idea.

What I think when I hear beneficiary review is Opportunity!

Yes, all the obvious thoughts are extremely important. For the consumer, a beneficiary review is their chance to match current beneficiary designations with their desired disposition of assets:

  • Are all assets going to the desired person(s)? In the desired manner?
  • Have “worst case” contingencies been considered and covered? Is the client sure?

After a thorough review of Zenith Marketing Group’s Beneficiary Review Producer Guide, you should be capable of helping clients answer these questions.

When conducting your reviews, be on the lookout for these hot button areas of significant concern where a misdirected designation may cause great distress or unintended consequences for you. Here are some of these concerns:

  1. Life insurance/other assets payable to the “estate of the insured.” Depending upon the client’s factual situation, this may not be an efficient designation. Proceeds would be included in the probate estate of the insured; thus, they would be subject to probate expenses before being distributed to the estate beneficiaries.
  2. Insured has divorced since insurance was purchased. Proceeds may still be payable to a former spouse.
  3. Re-marriage. The same issues as divorce emerge and re-marriage may create others. For example, who are the contingent beneficiaries on a life policy? The insured’s children, children of the current marriage, or someone else? Be sure that the intended parties are designated.
  4. Planning if the beneficiary predeceases the insured. This is why a contingent beneficiary is strongly recommended in all situations. If no contingent beneficiary has been named it is likely that proceeds would become payable to the insured’s estate.
  5. Testamentary trust is named. A testamentary trust is created by the will upon the death of the insured. Thus, it does not exist until the will has been probated, which may be some length of time. This may cause delay in distributing life insurance proceeds. If the will and trust are outdated and pass assets to unintended parties, this aggravates an already inefficient designation. The clients should seek legal advice with regard to any questions they may have regarding how a trust may be established or how a trust may be applicable to their factual situation.

But for you, the producer, the process of collecting data about client assets and their disposition will help you identify insurance shortcomings, and, in many cases, point to the need for a more detailed and separate insurance review and the potential for a new insurance sale. Opportunity. Use the Zenith Beneficiary Review Financial Journal with your clients to collect the data.
This thorough collection of data may reveal assets you had no idea even existed, leading to discussions such as:

  1. Do current insurance products continue to meet the client’s needs?
  2. Do current products possess the necessary features (for example, a guaranteed death benefit) desired by the client?
  3. Is the product type appropriate to meet client needs? (term, UL, etc.)
  4. Is the insurance amount adequate? (An insurance needs analysis will help determine amounts needed.)
  5. Are there health insurance gaps or needs which may require remedy?
  6. Is there a need which may be filled by annuities, either deferred or immediate?
  7. And, are there other individuals within the client’s sphere of influence who could benefit from a beneficiary review, who may also have insurance needs?

Answering these questions should lead you to new insurance sales opportunities and the chance to enhance client trust by demonstrating your ability to offer competent and comprehensive life insurance services.

About Paul Seidel

Vice President of Marketing

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