Is your life insurance about to fall apart?

Published on 10/24/2023

End of year is a great time to reflect upon whether your permanent life insurance policies are still on track.

In spite of the recent uptick in interest rates, most non-variable life policies have had gradually declining interest rate performance over the last 25 years. In fact, you have to go all the way back to the 1970s to find credited rates as low as what recent rates have been for most companies issuing whole life policies.

For any non-variable policy issued broadly between 1975 and 2015, it’s almost a certainty that the interest rate performance on the policy does not match what was originally illustrated.

Returns on variable policies are all over the map, due to not only volatility in market performance but also the specific funds and potential changes selected by the policyowner.

The bottom line is that a significant amount of in-force policies in place today are no longer on track to meet the original objective, and in many cases those policies could even be in jeopardy of expiring worthless before the death of the insured. Policies in that state are more accurately characterized as a gamble rather than insurance.

So what’s the easiest thing to do to figure out if your policy is at risk?

  • Ask for an “as-is” illustration from your agent/company that shows each and every policy year out to maturity/expiry.
  • In the case of a variable policy, you will also want to specify an assumed gross return that is commensurate with your policy’s future asset allocation and your expectations for those choices.

Through inspection, you can see if the policy falls apart. 

  • To be safe, you should make sure that the policy is illustrated to last at least a handful of years beyond the age at which you view as the absolute upper bound of your longevity. For most people in good health, that probably means that your policy should be illustrated to last to somewhere between ages 105 and 110.
  • Even better is to have a policy that is illustrated to never run out - though for insureds who are in relatively poor health, the calculus can be turned upside down as the policyholder’s objective may shift to avoiding unnecessarily overfunding the policy.

If the policy falls apart at an unacceptably young age, then some form of remediation is required. Depending on the specific type of policy you have, your options could include: surrender, replacement, or modifications.Even if the policy is not illustrated to fall apart, you may be left wondering if your current policy is still worth maintaining.

Whatever your situation, if you are in need of an independent fiduciary to help evaluate your situation, please contact me at 414.630.1778 or

I don’t manage money. I don’t sell products. My sole objective is to help you get the best bang for your buck with your life insurance or annuity portfolio. Whether it’s minimizing/eliminating agent compensation on new purchases, optimizing the management of your existing policies, or discovering that surrendering is your best course of action, you can rest easy knowing that there are not any ulterior motives in the recommendations you receive from me.