Life Insurance Purchasing
If someone depends on you financially, chances are you need life insurance.
Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs, such as daily living expenses, mortgage payments and college tuition. What's more, there is no federal income tax on life insurance benefits.
Our Life Insurance Purchasing Services include:
- Life insurance needs analysis – what type and what amount?
- Implementation of new life insurance – term and/or permanent
- Placement of annuities – immediate or deferred
At Farr Johnen & Associates, we are insurance brokers who are not tied to specific insurance companies or products. We represent our clients and their best interests in the insurance marketplace and provide immediate quotes for all life insurance products available in the United States. Additionally, we use a needs-analysis calculator to help you determine the appropriate coverage for you and your family.
Life Insurance Policy Analysis
Have you reviewed your life insurance in the last 3 to 5 years? Periodic review of your policy helps protect its value.
Life insurance is an increasingly complex asset class. Each policy is unique and should be individually managed to make sure it continues to serve its purpose and achieve the desired financial outcome. At Farr Johnen & Associates, every policy analysis we perform is comprehensive and highly customized. Each policy contract is read from start to finish to identify potential issues. And, we very often discover areas for remediation or improvement.
What does our policy analysis process generally entail?
- Assurance of policy duration (avoid a lapse of coverage)
- Cost management to ensure you are not paying too much, yet enough to preserve the intended financial outcome
- Reduction or elimination of policy taxation
- Maximize market value if selling or settling a policy
- Capitalization on all contract provisions (conversions, swaps, living benefit riders, etc.)
Periodic policy analysis is especially important for
Trust Owned Life Insurance.
Trust Owned Life Insurance (TOLI) requires a higher standard of care. Most life insurance we review is owned by a trust and the trustee has a fiduciary obligation to the trust beneficiaries. The trustee must meet Uniform Prudent Investor Act (UPIA) standards or the requirements of individual state law to care for and responsibly manage policies within the trust.
Specifically, the UPIA requires trustees of Irrevocable Life Insurance Trusts (ILIT) to evaluate the appropriateness of TOLI and manage ILIT assets to minimize costs and maximize benefits to trust beneficiaries.
What can you do to protect and optimize your policy?
In California, only a Licensed Life and Disability Insurance Analyst can legally conduct policy analysis in exchange for a fee. Glen Farr of Farr Johnen & Associates is one of only 28 Licensed Life and Disability Insurance Analysts in California.
Glen’s detailed policy service includes:
- Narrative remarks for the policy owner / trustee intended for sharing with trust grantors and beneficiaries
- Review of in-force illustrations to determine projected and/or guaranteed duration of coverage (i.e. what premium amount will achieve the appropriate length of coverage)
- Longevity assessment to determine if the insured could “outlive” the policy. An independent assessment by a qualified, outside vendor may be recommended.
- Changes in the health or tax status of the insured are evaluated and beneficial policy adjustments are then recommended
- Carrier financial strength is reviewed and benchmarked
- Policy replacement options are evaluated
- If needed, determination of market value is provided by third party appraisers or potential life settlement buyers. Valuation may be necessary for intra-family sale or gifting of a policy
State of California Dept. Of Insurance notice of July 24th, 2013 states:
What Is A Life and Disability Insurance Analyst and Who Needs this License?
As defined in Section 32.5 of the California Insurance Code, a Life and Disability Insurance Analyst is a person who for a fee paid by anyone other than an insurer, advises any person insured under or named as a beneficiary of, or having an interest in, a life or disability insurance contract in any matter concerning that contract or his or her rights in respect to the contract. For instance, a person charging a fee to a consumer for reviewing an existing whole life insurance policy to determine whether the policy is worthwhile to keep in force is acting as a Life and Disability Insurance Analyst.
Another example would be a person charging a fee to a consumer for ongoing monitoring of a life insurance policy for a trust or similar arrangement would be performing the duties of a Life and Disability Insurance Analyst. Holding a license as a life and accident/health insurance agent does not entitle a person to act as a Life and Disability Insurance Analyst.
To perform these activities, individuals must also obtain the Life and Disability Insurance Analyst license, unless meeting the definition of a person exempted from these licensing requirements as stated in Section 1831 of the California Insurance Code.
Also, Section 1832 of the California Insurance Code does not allow a Life and Disability Insurance Analyst to receive a commission from an insurer when the person is already receiving a fee from a consumer for reviewing the same existing life or disability insurance policy.