CLIENT ALERT: LIFE INSURANCE VIABILITYOctober 26, 2009
A significant concern of any owner of life insurance should be whether or not the insurance for which you have been making the premium payments will be in place at the time of your death. There are two reasons why the insurance may not be in existence. First, the company from which you purchased the insurance is out of business or unable to pay the death benefit. Second, many insurance policies take a portion of the premiums you pay and invest them in the market to provide cash available for your use or to replace the need for paying future premium (cash value). If the cash value has not met the projections set when the policy was purchased, the death benefit could be in jeopardy, or unexpected premium payments may be expected in order to maintain the death benefit. In either case, the death benefit you may be counting on may not exist now, or at the time of your death.
In the past 6 months, some insurance companies have gone out of business and other companies which were thought to be strong have been downgraded by the various rating agencies. If your insurance is being provided by one of these institutions, your death benefit could be in question. Further, if your policies are universal or variable life, the market downturn may have done irreparable harm to internal cash value and the feasibility of those policies.
We strongly recommend having your life insurance policies reviewed to determine if the death benefit is secure. In some cases, in addition to relieving your concern, these reviews can result in a lower premium payment for the same or greater death benefits. If you wish to review your current life insurance, you should contact your life insurance broker, or let us recommend some brokers with whom we have worked. Many brokers will perform the review for little or no charge.
F. Scott B. Geneva, Esq.
MEYERS, ROMAN, FRIEDBERG & LEWIS
28601 Chagrin Blvd., Ste. 500
Cleveland, Ohio 44122