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One of the more important features of a life insurance policy is often the most overlooked. The in force insurance ledger (or in force ledger, as it’s sometimes called) is a computer-generated illustration of a cash value life insurance policy’s current, projected, and guaranteed values. Typically these illustrations show values over a 20-year period beginning with the current year. Agents will generate assumptions of premiums, interest, and policy withdrawals to prepare the illustration.
So why does a policyholder need an in force ledger? Most policyholders with universal or variable life policies have seen a decline in the values of their policies in the current recessionary market. Back in 2002, the life insurance industry was wracked with a two-year decline in stock prices and interest rates, which adversely affected life insurance policies. As a result, policyholders whose policy premiums were being funded out of projected interest amounts were finding that their premiums were going unpaid and their policies were in danger of lapsing. Those policyholders who knew enough to get an in force ledger illustration from their agents were able to stave off the bleeding and preserve the value of their policies. Life insurance agents also use in force ledgers to help their customers compare existing permanent life insurance coverage with a potential new policy.
For Life Settlements markets, in force ledgers give Life Settlements providers an illustrated view of the projected future costs and coverage of a particular policy. Those policyholders considering applying to the Life Settlements market need to provide this status report to the providers as proof of the policy’s current status, history, and valuation.
Also, using an in force ledger to get a comprehensive view of your policy’s performance is a great idea if you’re considering your life insurance options. Is entering the Life Settlements market right for you? It could be, based on what your in force ledger illustration shows. Life Settlement brokers are able to help you determine your policy’s viability, but be careful. Do not compare your policy or any replacement coverage/Life Settlements deal using limited policy information. You need a year-for-year performance picture based on calendar years, not policy years. In other words, compare similar criteria in terms of guaranteed and illustrated cash values and death benefits. That means comparing the exact same time frame from policy to policy. Do not make the mistake of comparing the current policy’s past performance with any new policy’s future performance.
What your life insurance policy’s in force ledger will tell a Life Settlements provider and investor is the projected future premium costs of your policy and what it will take to keep that policy in force until a specific age or until policy maturity. It’s yet another tool to help investors decide the value of placing a Life Settlements offer with you.
To go over in force ledgers and understand how your policy’s valuation affects your chances at a Life Settlements deal, contact Opulen Capital. Our advisors and specialists can assist you in obtaining an in force ledger from your insurer and understanding your options. Call us at 877-678-5361.