Life Insurance: An Overlooked Asset on the Balance Sheet

Life insurance is often the largest unmanaged and least understood asset on a family’s balance sheet. Often, families hold multiple policies with limited clarity on why they were purchased, how they have performed, or what options are available. We find that our clients benefit from a review of their policies, both during onboarding and on a periodic basis. It can help uncover ways to improve coverage, reduce waste, and better align policies with a broader plan.  

The review process begins with assembling a complete inventory and requesting current in-force illustrations from carriers. From there, evaluation focuses on purpose, cost, performance versus original projections, ownership and beneficiary designations, conversion windows, and key deadlines. This integrated view often reveals opportunities to fine-tune the portfolio without increasing out-of-pocket premiums. 

Reviews Resulting in Cost Savings 

We recently conducted a review when a client explained they hadn’t spoken to their insurance broker in years. When our team stepped in to proactively review this client’s policies, we found some permanent life insurance policies had built up enough cash value to cover future premiums until the client turned 99. By switching the payment method, we were able to use cash value to pay the premiums instead of using cash. With this simple adjustment, we were able to help this client improve their life insurance portfolio without spending more money.   

Another example of cost savings occurred when we reviewed a client’s trust containing a term life insurance policy. Originally, the policy was bought to provide liquidity for an estate plan. This term policy – like most term policies – contained a clause allowing it to be converted to a permanent policy within a certain timeframe without additional underwriting. 

In the time between policy issuance and our review, the client’s estate plan had changed, and the coverage was no longer needed. Rather than convert to a permanent policy, we were able to help our client sell their policy to a life settlement company for an approximate sum of 12 years of premiums. 

What to Review—and When 

Annual reviews are ideal; every three to four years at minimum, especially for permanent policies or when conversion deadlines are approaching. These should focus on current in-force illustrations, premium sufficiency, guarantees versus non-guaranteed elements, cost of insurance and crediting rates, carrier strength, riders, ownership and beneficiary alignment with the estate plan, and any policy loans or tax considerations. Even term policies merit monitoring for conversion windows and other provisions that may create value. 

Although Tolleson does not sell insurance, our team helps families understand what they own, coordinates with carriers and brokers, and integrates life insurance decisions with estate planning, liquidity, philanthropy, and long-term investment strategy. We can also establish a cadence for ongoing oversight, so policies continue to serve their intended purpose over time.  

Taking a proactive approach to life insurance can help ensure your policies remain a valuable part of your overall financial strategy. If you are interested in learning more about our approach, you can message us on our contact us page.