Major Stakeholders Exiting the Life Insurance Business

Another carrier has announced that they will no longer  distribute life insurance products as of December 31, 2019. At First Western Trust we understand that life insurance may be a big part of your connected financial portfolio and want to ensure that you are aware of the changing landscape in this market.

Anytime an insurance company makes a major change like this, policy holders should work with their independent insurance advisor to review their current coverage and determine what is in their best interest going forward with their policies. Our Insurance and Risk Management Team of Catherine Runge and Garrod Moltz, led by Don Silversmith are ready to go over your options.

With the exit of many of these companies, there are several things you will want to consider:

• Performance: When companies discontinue their life insurance products, they no longer have the need to stay competitive in the market with enhancements or new features. Often times you will see a drop in crediting rate, this means that as a policy owner you will want to work with your independent insurance advisor more frequently to review performance and make sure that the product is still aligned with your goals.
• Section 1035 Exchange: A provision created by the Internal Revenue Service (IRS) that allows a contract or policy owner to trade one product for another with no tax consequences. Underperforming or outdated products can be exchanged for newer products that may be better investment options with more attractive features and less restrictive provisions.
• Customer Service: Many companies that discontinue their life insurance business find it difficult to retain and recruit top level professionals to service a closed block, therefore you will want to carefully monitor the service you are receiving.
• Business Continuity: Ensure that the carrier exiting out of the business does not plan to sell its block to a third party.

Our team is committed to delivering regular reviews to ensure that our risk management services continue to help you achieve your overarching goals. We incorporate insurance and risk management solutions into your overall wealth plan. In doing so, we help your family reach your goals for each dimension of your wealth. Part of that is assessing your options, when looking at different life insurance carriers there are many things to keep in mind:

• How long has the carrier been in the business line?
• Has it been successful?
• Do they have a product and distribution strategy that has scale?
• How competitive is their history of inforce performance and managing non-guaranteed policy elements?

We recommend that clients meet with their independent insurance advisor anytime that they have a policy with a company that has announced major changes that could impact policy performance or service.

You may have never considered life insurance as a tool to help you accomplish strategic financial goals, with our ConnectView® approach and experienced team we can create a holistic plan that supports your vision for your life. 

Investment and insurance products and services are not a deposit, are not FDIC-insured, are not insured by any federal government agency, are not guaranteed by the bank, and may go down in value.

First Western Trust cannot provide tax advice. Please consult your tax advisor for guidance on how the information contained within may apply to your specific situation.