Insurance is not a very glamorous topic to discuss, but it is an important one. Continued from our last article on designing a diversified life insurance portfolio, we're going to discuss the responsibilities of your insurance advisor as well as your responsibilities as the policyholder. When both parties understand the responsibilities of the other, they are more likely to communicate clearly and to understand the other's goals and obligations.
Responsibilities of your insurance advisor:
1. Create, recommend, and execute an insurance strategy that is consistent with your estate's objectives, time restrictions, risk acceptance, guidelines, and limitations.
2. Recommend appropriate insurance companies. This can only happen with an independent agent who represents several companies.
3. Some agents can only represent one company like State Farm or New York Life.Counsel you about the recommended selection and allocation of insurance assets. This includes educating you about the different options available and explaining how they will support your short and long term financial goals.
4. Continuously monitor the performance of your life insurance assets. This is particularly true of universal and variable life insurance policies which can fluctuate in value more than a traditional whole life policy.
5. Recommend changes as necessary to meet your life insurance portfolio's goals.
6. Be available for phone calls and meetings as necessary, and at your request. This should include an annual life insurance check-up to see if you need to make changes in coverage or beneficiary updates.
7. Prepare and discuss periodic reports.
1. Observe the progress of your insurance portfolio and be alert about the progress toward your short and long term financial goals.
2. Be cognizant of the insurance policies' objectives and how they serve your portfolio.
3. Discuss and instruct your advisor to make appropriate changes to the plan, and approve or disapprove of your advisor's recommendations; be engaged. If you don't understand something, ask.
4. Provide your advisor with information about your financial circumstances and risk acceptance; be sure to notify your advisor about changes to your information, including contact information, marital status and beneficiary designations.
5. Read, understand and ask questions about the information in your insurance policies' contracts.
6. You are responsible for exercising your rights, as attained through the insurance policy purchases, and through your agreement with your advisor.
If you have any questions about the roles that your independent insurance advisor or you play in working toward your short-term and long-term financial goals, it is important to discuss them openly with your advisor as soon as possible.
A diversified life insurance portfolio is an important part of a business owner's exit plan. it begins with knowing your options & rights and responsibilities as a policyholder, as well as those of your insurance advisor. For more on this topic, check out "Exit Insight: Getting to Sold!" by author Joseph M. Maas, available at Merrell Publishing and Amazon.com