AUDITS & POLICY REVIEW

Rose Street Advisors has long been a leader in providing life insurance audits and reviews as part of our services. In addition, we provide reviews as a resource to other professional advisors such as CPAs and estate-planning attorneys, and nonprofit organizations.

Audit

Our Life Insurance Audit service thoroughly evaluates the performance and viability of a client’s permanent life insurance policies. We will see if the past and projected performance of the policy performs as intended and if it will meet the policy owner’s needs in the future.

As an initial step we provide:

  • Summary of current policy values
  • Explanation of the current type of policy
  • Review of the surrender charge schedule
  • Mortality assumptions and life expectancy data used to price the current policy
  • Review of the underwriting rate used to price the current policy and determine if a rate class/mortality cost improvement is possible in the current marketplace
  • Review of the underlying life insurance company in context with current market trends
  • Explanation of certain other relevant contract provisions

At the same time, we will request in-force illustrations that take into account the actual performance of the policy since it was issued, and show how the policy may be expected to perform in the future based on certain assumptions.

The overall goal of the in-force illustration review is to determine if the policy is adequately funded at the current premium level. Given the prolonged low interest-rate environment and other factors, it is very common for policies to lag behind the projections shown on the original illustrations.

Review

Rose Street Advisors will perform a detailed review of the insured’s medical history and records and evaluate any health changes that have occurred since the policy was issued. Changes in the insured’s life expectancy – longer or shorter – since the policy was issued have a significant impact on the course of action that is ultimately chosen.

The end goal is to determine what actions should be taken in light of the policy’s past and projected performance. Possible suggested actions include:

  • Maintain the current policy “as is”
  • Restructure the current policy by changing certain policy elements such as the amount of premium paid, the optimal premium schedule, the death benefit, etc.
  • Replace the current policy with a more competitive policy.