What Fiduciaries Need to Know about Life Insurance Illustrations in Relationship to their Fiduciary Duties
Heckerling Institute on Estate Planning
By Bill Boersma & Steven Zeiger
The primary point of this part of the presentation is to introduce everyone to third party, objective modeling that can prove invaluable. Life insurance illustrations are not meant to be used in the manner they often are in the sales process. The inability to illustrate the effects of variations in crediting rates is a major limitation. There are innumerable assumptions that go into “building” a life insurance policy and most of the choices are made with no input or awareness of the policy owners and advisors. Digging in to show the results of seemingly minor changes in assumptions and market behavior can be very illuminating.
The result of most policy modeling resulting from this analysis doesn’t fare well against the static projections. Knowing that for some insurance products what is often presented at the point of sale may not bear much resemblance to policy performance vagaries of the real world, our end goal is to impress on you the importance of introducing independent, third party resources to the life insurance sales and management process. We invite you to reach out to perform this modeling on your policy and/or the policies of your clients, whether it’s an in-force policy or a proposal that’s been presented for consideration.
