Life Insurance Financial Evaluations, LLC
Life Insurance Alternatives Evaluation

Second Opinions for Life Insurance Policy/Portfolio Replacement or Section 1035 Exchange Recommendations

What is it?

A Second Opinion for Life Insurance Policy/Portfolio Replacement or Section 1035 Exchange Recommendations provides a comprehensive review and evaluation of proposed policy replacements and/or Section 1035 exchanges.  This analysis considers the risks, tradeoffs such as short vs. long term policy performance and guaranteed vs. nonguaranteed policy values.  It also identifies critical success factors and other policy management recommendations.  This task may also provide an analysis to determine if other plans or products can provide similar benefits with lower risk.

Why it is Important?

Many agents  earn substantial commissions by conducting policy reviews in an effort to replace the current policy with a new one.  Since agents have a financial incentive (i.e., new commissions), they can be biased and limited in their evaluation of existing life insurance policies.  As a result, many policy review activities are limited to running new illustrations, without determining if the existing policy can be enhanced.

There are many factors that should be considered when analyzing a policy replacement or Section 1035 exchange.  This task provides the unbiased insight needed to make an informed buying decision, and considers whether steps should be taken to enhance or modify existing coverage.

How do we do it?

Life Insurance Financial Evaluations, LLC uses proprietary Microsoft Excel financial models to compare life insurance policies by calculating expected rates of returns, equivalent taxable yields, and net present value of life insurance cash values and death benefits.  In addition, our proprietary models calculate nonqualified benefit plan projections on an individual participant basis (static environment).  We also project benefits on a dynamic basis (considering participants exit the plan and are replaced by new participants).  These models often utilize Visual Basic macros to efficiently make calculations for plans with hundreds or thousands of participants.  In addition, the financial impact of the plan on corporate financial statements is also explained.  The results are then summarized in a written report.