In working with a planned giving department of a major university on their life insurance program, I advised their lead attorney that a critical place for them to start is a complete review of the insurance policies that are already on the books.

I’ve screamed and yelled about the horrible state of in force permanent life insurance, whether universal life or whole life, and the fact that a large and completely unacceptable percentage of in force policies are heading for a meltdown. These meltdowns will happen for two reasons.

First, some bottom feeding agent sold a policy that wasn’t fully guaranteed, putting the future health of the policy at risk in the best of times and in imminent peril in times like we are experiencing right now. Second, the bottom feeder made his commission and hasn’t bothered to stay in touch. An annual review of a policy at risk, and quick action if things start turning south, is the only way to keep the insurance in force.

I spoke with an attorney/planned giving specialist with Met Life the other day and he indicated that a percentage approaching 70% of their new permanent life insurance business was directly due to replacement of policies that were failing because of one of the two reasons above.

Planned giving is a generous way to give back to an institution that many attribute their success to. Universities, churches and charities regularly receive gifts of money, land, and are made the beneficiaries of life insurance policies. While life insurance proceeds are, for planning purposes, held way out in the future, they are nevertheless held somewhere in future planning. And if those policies, or a large number of them go belly up, it can damage future plans for the institution and waste all of the money that the donor has put out over the years to keep the policy in force.

Bottom line. Anyone with permanent insurance, whether personal, business, or for planned giving, that doesn’t have their policy reviewed on an annual basis is missing two very important things. Number one is an agent who was in it for more than just a quick commission and number two is the ability to salvage the policy and your investment if things don’t go well.

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