Check life policies with an unbiased advisor.

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Getting objective advice about your life insurance

When it comes to life insurance, the basics are easy. There are tons of online tools that can help you decide how much to own. Some may even be able to help you discern the type to buy. Is it better to own annual renewable term, 20 year term, universal life or whole life?

These same tools can also direct you to a plethora of online brokers to sell you the coverage.

But for some of the tougher issues, such as ownership structure, beneficiary elections and the estate tax consequences you need more advice.

Even tougher is to get independent advice for those already owning a substantial insurance portfolio. For the most part, life insurance agents sell life insurance. There may be some advice associated with the sale, or not. Some advice may be sound and reasonable when compared to your alternatives. Some may be biased in favor of keeping or adding to your insurance portfolio – most of the time simply stacking policies of the same type with the same company one after another.

There are two types of life insurance agents. One that is considered a proprietary agent who is employed by one major insurance company. These agents may also have access to life products from other companies, but their compensation arrangements, benefits and employment contracts may require that their employer company have first crack at all potential business they come across.

An independent agent does not have any production minimums, quotas or other responsibilities to sell any particular companies. But remember that insurance sales is their main source of compensation. Simply because they may call themselves independent agents does not guarantee that they are more qualified or more ethical. Whether you work with an independent or proprietary agent, it’s still your responsibility to make wise decisions with the information that you are given.

Objective advice about your policies is best delivered by someone who doesn’t sell life insurance. You’ll immediately notice the style and substance of the advice if you find a purely objective advisor who does not sell insurance. Of course, working with a person like this will cost you fees whereas most agents work sans fees. But in my experience, most agent-driven reviews seem to have a product solution attached to the analysis. Even though they may not charge a fee, they don’t work for free.

The non-commission insurance advisor will review details of your particular policy and request current in-force illustrations from the carrier(s) for each policy. They should review the need or prudence of the current holdings. They should help determine what is necessary or what can be dropped based upon your individual facts and circumstances and tolerance for risk. Your objective advisor should also advise with respect to ownership, taxation and the estate tax consequences of your insurance holdings.