Why an annual policy review matters

Buying a policy takes a few weeks. Owning one takes decades. Most of the problems we find in existing coverage were not mistakes at the point of sale — they are the result of a life that carried on changing while a contract sat in a drawer. An annual review is a short, boring appointment that catches those changes while they are still cheap to fix.

What changes without anyone noticing

• The amount of coverage needed. A mortgage shrinks, a child is born, an income doubles, a business is started.
• Who should receive the money. Marriages, divorces, births, deaths and estrangements all age a beneficiary form.
• How a flexible-premium policy is performing. Universal and indexed universal policies depend on crediting and charges, and both move.
• Deadlines inside the contract. Conversion rights on a term policy expire on a date almost nobody has in their calendar.
• Contact details. A carrier that cannot reach you will still lapse the policy for non-payment.
• Whether the household could even find the policy. This is the most common gap and the easiest to close.

What a review should actually check

A review is a checklist, not a sales appointment. The output should be a short list of things to do, and quite often that list is empty.

1. Confirm every policy in force: carrier, policy number, type, death benefit and premium.
2. Re-run the coverage need against today’s figures rather than the ones from when you bought.
3. Read the current beneficiary designations, primary and contingent, straight from the carrier.
4. For flexible-premium policies, request a current in-force illustration and check the age at which the policy is projected to lapse.
5. Check the term conversion deadline on any term policy, and note it before it passes.
6. Confirm premiums are being paid from an account that still exists and that notices reach a current address.
7. Check whether riders you are paying for are still relevant, and whether ones you skipped are now worth revisiting.
8. Confirm the household knows where the documents are and who to call.

What a review should never be

A review is not a pretext to replace a policy. Replacing coverage can be genuinely appropriate, and it can also be expensive and harmful: a new policy restarts the contestability period, is priced at your current age and health, and may carry surrender charges on the old one. Anyone who reviews your coverage and concludes every time that you should replace it is not reviewing anything. If replacement does come up, it should come with a written side-by-side comparison and a clear statement of what you lose.

Do not cancel, lapse or reduce coverage you already have based on a review conversation alone. Nothing should be cancelled until replacement coverage is issued and in force, if it is being replaced at all.

How long it takes and what it costs

A review is usually a single conversation of under an hour, plus whatever time the carrier takes to send an in-force illustration. Most of the work is ours: pulling the current values, reading the designations back to you, and writing down what changed. The output should fit on one page, and if the honest conclusion is that nothing needs doing this year, that is a good result rather than a wasted appointment.

The one thing a review cannot do is fix a problem it never finds. Policies that are never looked at fail in the ways described above, quietly, and by the time the family notices, the options have narrowed. Putting a recurring date in the calendar is the whole discipline.

We do this once a year for clients at no cost, and we will happily read a policy we did not sell. Tax and legal consequences of any change depend on your circumstances, so involve your own tax adviser and attorney before acting on anything a review turns up.