Life Insurance Asset Management

A personal financial statement includes a listing of assets. To build net worth we must manage the assets we own to make certain we maximize their value. Life Insurance often represents one of our client’s largest assets but many of our clients had not recognized the need to manage their life insurance assets like other asset classes, creating concerns and problems with meeting their goals.

For most assets, the need for attention and the cost of maintenance are obvious.

  • Investments
    • Mutual fund fees can vary widely – they average from 1.5% to 2.0%.
    • Private investment management fees also vary widely but average around 1.0%.
  • Home
    • Costs include painting and other regular maintenance costs. 
    • These are not incurred every year but experts recommend a fund of between 1.5% and 4.0% of the value of the house be set aside annually for these expenses.
  • Auto
    • Autos are depleting assets and require greater maintenance to minimize loss in value each year.
    • Costs include oil changes, tires and other regular maintenance, etc.
    • Costs vary but are estimated to be .15 to .20 per mile. Average miles per year are 15,000 placing costs at $2250 to $3000 per year. Average cost of a new car is around $30,000.
    • This cost represents 7.5% to 10% of the asset.

Our management process includes the following valuable services:

  • L.I.F.E. ReportLife Insurance Fiscal Evaluation – We regularly review your objectives and your circumstances to help make certain the policy is still in alignment with your goals.
  • Premium Adequacy Report – Many policies have flexible premium provisions which may mean the premium is not guaranteed to keep the policy in force. We systematically obtain reports from the insurance company to help keep the policy on track to meet your objectives.
  • Competitive Scan – We review other product offerings to help make certain there is appropriate, competitive value in your policy.
  • Insurance Company Due Diligence – We provide a review of the life insurance company to help provide an early warning system if there are financial issues at the carrier. We notify our clients of any ratings action for their carriers throughout the year.
  • Policy and file maintenance – We keep an electronic copy of the policy in a secure location to avoid delays if a copy is needed. We also will keep your files up to date with current information on policy performance as provided by the insurance company.
  • Access to advice – We are available to meet with you and/or your advisors and to help answer any questions about your life insurance program.

Life insurance asset management is done through our Stewardship Support Program. Our costs are significantly less than the above costs, for an asset that is among your most valuable. Our fees are determined on an individual basis but generally vary from .025% to .25% of the death benefit, based on the size and complexity of the insurance portfolio.

Here are a few examples of the cost of our management process and the results obtained for our clients.

  • Mr. M – annual premium savings after our report - $1800. Annual SSP cost: $400 (.005% of his death benefit)
  • Dr. J – immediate savings after our analysis - $17,000. Annual SSP cost: $500 (.1%)
  • Mr. S – available cash value with no loss of coverage or increase in annual costs – after full review of needs and goals - $75,000. Annual SSP cost: $250.

There is no cost to considering our service to determine if it is a fit for you. Please give us a call at 205.414.9955 and let’s discuss how we can help take the doubt and risk out of this critical and valuable asset.

Neither Petra Life Services, Inc. nor its representatives may give you tax or legal advice. We recommend that you consult with, and rely on, your own tax and legal advisors about the concepts presented in these materials.