It’s Time to Look at Life Insurance Options

As we all know, nothing is normal about 2020. The crises this year have created opportunities and obstacles in the insurance market. Add in Regulation Best Interest (Reg BI) and the upcoming changes to Life Insurance Illustration Model Regulation (#582), and we need to consider additional options and opportunities. 

The Illustration Model changes may eliminate hedged index life insurance. The new illustration guidelines limit the assumed earned interest rate for indexed credits in an account and lower the rates that may be illustrated. Many of the current index life products will be replaced with variable products. As we have cautioned for several years, index life should be illustrated conservatively because of the many factors that go into its performance. New crediting regulations will require even more complicated illustrations.  

Under Reg BI, any recommendations need to be made in the customer’s best interest; so over the next several months, policies must be monitored and recommendations made if they are no longer in the client’s best interest. Options to be considered are replacing the policy with a new policy, modifying the current policy, surrendering the policy, or in some circumstances, selling the policy. None of these options should be recommended until the customer consults their tax advisor. 

If the customer no longer needs the life insurance, or can no longer afford the premiums, selling the policy (a life settlement) should be considered. The Leaders Group has encouraged life settlements as an option since our inception. Many times, selling a policy is the best option for a customer and one that should be explored if a client is considering letting a policy lapse. Visit the Life Insurance Settlement Association’s website at for more information about the life settlement process and review our procedures on page 40 of the Compliance Manual. Don’t hesitate to reach out to for a list of our approved brokers and providers.  

As we wrap up 2020, we know we will continue to have challenges. But let’s all remember that the COVID-19 pandemic has made people much more aware of their own mortality, and now is a great time to review their life insurance coverage and investments to make sure they are configured in their best interest. 

Jane Riley, Chief Compliance Officer