Audit and Adapt: The Dynamic Approach to Life Insurance Management

    | March 11, 2024


    In the landscape of financial planning, life insurance stands as a critical pillar, designed to offer a financial safety net. However, just paying the premiums isn't enough to ensure your life insurance policy remains effective. It's a common mistake that can lessen the benefits of permanent life insurance. Many people don't check their permanent life insurance policy after they first get it, which can lead to it not performing well or not fitting their current financial needs. This oversight means that "permanent" life insurance might not offer the lifelong coverage it's meant to, especially as your financial situation changes. Interestingly, people often review their cable and cell phone bills more frequently than they do their life insurance policies, despite the latter being far more important in ensuring financial security for their loved ones.

    The Crucial Need for Policy Audits

    Permanent life insurance is conceptualized to provide lifelong coverage, in contrast to term insurance, which is explicitly temporary. However, the promise of lifelong protection is contingent upon the policy's performance and its alignment with the policyholder's evolving needs. Conducting regular audits is essential to ensure that the policy reflects any changes in personal circumstances, economic conditions, and financial objectives. Without these periodic evaluations, there's a tangible risk that the policy could lapse without notice, leaving beneficiaries unprotected and undermining the financial safety net it was meant to establish.

    Beyond Premium Payments: Ensuring Policy Health Through Audits

    The security that comes from up-to-date premium payments is necessary but not sufficient to ensure a policy's health. To guarantee that permanent life insurance policies continue to fulfill their intended purpose, policyholders must engage in proactive management strategies:

    Commit to Regular Audits: Establish a routine for assessing your life insurance coverage, particularly after major life events or significant shifts in financial status. An audit can reveal if your policy remains in good standing or if adjustments are needed to address any emerging gaps in coverage or funding.

    Seek Expert Guidance: Consulting with financial advisors or insurance specialists is crucial. They can provide expert insights during the audit process, offering recommendations for tailoring your policy to better match your current and anticipated needs.

    Responsive Adjustments: If your audit reveals that your policy is underperforming or misaligned with your financial journey, consider recalibrating premium payments, amending the death benefit, or exploring alternative policy frameworks.

    Explore Life Settlements as an Option: Should the audit indicate that a policy has become a financial strain, no longer aligns with your goals, or is in jeopardy of lapsing, a life settlement emerges as a strategic alternative. This approach involves selling the policy to a third party, typically interested in policies held by individuals with a life expectancy of less than 15 years. It offers a chance to convert a potential liability into immediate financial gain, realigning your assets more closely with your present needs.


    Merely paying premiums falls short of what's required to maintain the efficacy of permanent life insurance policies. Regular audits are not a mere suggestion but a necessity for ensuring these policies deliver lifelong coverage and adapt to life's inevitable changes. The neglect of such audits can lead to unwelcome surprises, potentially compromising the financial safeguard life insurance is meant to provide. By recognizing the necessity for ongoing evaluations and being open to making adjustments, policyholders can ensure that their life insurance policy remains a steadfast component of their financial planning, offering enduring value and protection for those they care about.


    All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Telemus Capital cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Kovitz Investment Group Partners, LLC (“Kovitz”) DBA Telemus Capital. Telemus Capital is a division of Kovitz, a registered investment adviser with the Securities and Exchange Commission (SEC). Telemus Capital’s main office is located in Southfield, Michigan. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. Current and future portfolio holdings are subject to risk. Risks may include interest-rate risk, market risk, inflation risk, deflation risk, currency risk, reinvestment risk, business risk, liquidity risk, financial risk, and cybersecurity risk. These risks are more fully described in Telemus Capital's Firm Brochure (Part 2A of Form ADV), which is available upon request. Telemus Capital does not guarantee the results of any investments. Investment, insurance, and annuity products are not FDIC insured, are not bank guaranteed, and may lose value. Any reference to an index is included for illustrative purposes only, as an index is not a security in which an investment can be made. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. The S&P 500 index includes 500 leading companies in the US and is widely regarded as the best single gauge of large-cap US equities.

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    Todd Wolfe

    Todd joined Telemus in November 2022 after 28 years serving in multiple roles in the insurance industry. He has been an Independent Insurance Agent, Brokerage Manager, and also Regional Vice President for two Fortune 500 Life Insurance Companies. Todd is a proud Alumni of Michigan State University and continues to learn as a student of the industry earning both his Chartered Financial Consultant (ChFC) and Certification in Long Term Care (CLTC) designations.

    Todd Wolfe
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