As a fiduciary, you’re keenly aware that life insurance can often be the worst-performing asset of your clients’ financial portfolios, simply because they are so costly, complex and time-consuming to properly manage. Now more than ever, this industry is in desperate need of a fiduciary-oriented management process to resolve this pain point we’ve been facing for decades.
The variability and complexity of even just one life insurance policy is difficult to monitor and manage throughout the lifetime of the contract, and as a fiduciary, you’re responsible for an entire book of business, all of whom have different life insurance policies with different criteria for success. There is simply no one size fits all solution for your clients when it comes to life insurance, because they will inevitably vary in age, socioeconomic background, and health-risk rate classes. And while each of your clients may be unique from one another, they’re unified by their expectations of you in terms of continual management of their portfolio.
To deliver on these expectations for your clients, you need a management process that is both individual and comprehensive. The 2013 West Point Draft of Best Practice Standards for Life Insurance Stewardship incorporates a six-step guide that can be applied to help you help your clients prudently select, retain, and manage life insurance policies. Let’s take a closer look at these six steps.
Step 1: Define
It’s essential to define performance benchmarks for each client’s policies. One of the first conversations you should have with a client should be setting the specific goals and criteria by which to measure contract performance over time. Having this information to refer to when it comes to making changes or decisions about what to do with a policy can greatly reduce the risk you assume when you monitor and manage the insured’s portfolio.
Step 2: Analyze
As you well know, no two clients are the same. With varying risk profiles, life circumstances and long-term goals, each one of your clients will require a deeper analysis of what’s best for them. It’s your duty to listen to understand and be able to advise your client with an understanding of their circumstances, goals, and objectives.
Step 3: Strategize
Work with your clients to lay out a long-term proactive life insurance policy management plan. Talk with your client about what their five-year plan looks like, what their ten-year plan looks like, and so on and so forth. Having this conversation can help you better prepare for your client’s future needs.
Step 4: Formalize
After delving into contract specifics and lifetime goals and objectives with your clients, formally document these to use as a reference point. Doing so will help you better deliver on promises made to your client day one.
Step 5: Implement
Using the industry-specific and customer-centric knowledge you have, put your plan into action.
Step 6: Monitor
Proper management of life insurance involves periodically checking on changes in the health, risk tolerance, performance expectations and/or planning objectives of the client. Proactive inforce policy management tools like Proformex can be used to generate these reminders automatically to help you stay up-to-date with each of your clients.
By following this six-step guide and putting all the front-end work in, you can better serve your clients and even exceed their expectations. Especially if you implement a tool like Proformex that can send you reminders to keep you on track and monitor policies against defined performance criteria, automatically alerting you if something doesn’t seem right. This technology presents you with the opportunity to improve the way you do your job and keep your clients satisfied for life.