Life Insurance: Ongoing Service and Responsibilities

Importance of Ongoing Service

• Life insurance requires ongoing service due to complex products like universal life.
• Agents must maintain regular contact with clients, especially for complicated plans.
• Building a long-term relationship with clients is crucial.

Monitoring Clients' Changing Needs

• Life events (e.g., marriage, divorce, birth of children) affect insurance needs.
• Changes in employment, new houses, business acquisitions also impact needs.
• Agents should monitor these changes to identify additional risks or sales opportunities.

Minimum Requirements for Ongoing Service

• Agents should not view a policy as a one-time sale.
• Long-term client relationships can lead to additional sales.
• Agents should provide continuous support and adjust policies as needed.

Common Complaints and Solutions

• A major complaint is lack of contact from agents after the initial sale.
• Agents receive small ongoing commissions to incentivize service.

Policy Amendments and Renewals

• Clients may need to change beneficiaries, modify investment options, or amend smoking status.
• Agents should assist in policy renewals, especially for term policies with renewable features.

Policy Cancellations

• Clients must submit written requests to cancel policies.
• Permanent policies with cash value cancellations may have tax implications.

Policy Replacement

• Replacing a policy may be necessary when it benefits the client.
• Conflicts of interest arise due to commission structures; replacements should be in the client's best interest.
• Replacement procedures include a Life Insurance Replacement Declaration (LD).

Assignments

• Absolute Assignment: Transfers legal ownership; may have tax implications.
• Collateral Assignment: Assigns the policy as loan security; no change in ownership.

Claims Process

• Agents assist with death claims and provide necessary forms.
• Agents ensure policies are in force and confirm beneficiary information.
• Settlement options include lump sums, interest-bearing accounts, or annuities.
• Delivering death benefit checks in person reinforces the agent’s role and builds relationships.

Conclusion

• Ongoing service is vital in life insurance to address clients' evolving needs and maintain ethical standards.
• Agents play a critical role in supporting clients through life’s changes and claims processes.