Is Your IUL Up to Date?

Life insurance policies aren’t something you set and forget. As life changes and newer, more competitive products emerge, it’s crucial to revisit older policies to ensure they still meet your needs.

Many older life insurance plans, like indexed universal life (IUL) policies from 15 years ago, lack modern features such as chronic and critical illness riders. These riders are essential for covering expenses like nursing home or home care, which can become significant burdens later in life.

This blog explores a real-life scenario shared by Frank Biaggi, CEO of Biaggi Life, and his guest Kimberly Tran. Together, they discuss how reviewing a 15-year-old IUL policy revealed opportunities to update and significantly improve the policyholder’s coverage. Watch their full conversation on the Biaggi Life YouTube channel:

What Are the Biggest Problems with Old Life Insurance Policies?

Older life insurance policies often present significant challenges for policyholders.

In one example, a policyholder with a 15-year-old IUL plan had a $270,000 cash value and a $589,000 death benefit. However, the cash value wasn’t accessible without jeopardizing the policy.

Because the policyholder was no longer paying premiums, the cash value was simply sustaining the policy. If she withdrew any funds, the death benefit would decrease, and the policy could lapse without additional contributions.

Additionally, the policy lacked a chronic and critical illness rider.

This omission created a significant risk. Long-term care expenses, such as nursing home or home care costs, are common—about 70% of people will require these services before passing away. Without the rider, the policyholder wouldn’t have access to funds from the policy to cover these costs.



How Can an Outdated Policy Be Fixed?

A straightforward solution to these issues is a tax-free 1035 Exchange.

This process allows a policyholder to transfer their old policy into a newer, more competitive one without losing the tax benefits of the original plan.

For the replacement policy to qualify, it must offer improved features. These could include lower insurance costs, better returns, and the addition of riders for chronic and critical illness coverage.



The process is relatively simple, involving some paperwork to transfer the existing benefits to the new plan. The result is a modern policy with greater flexibility and coverage.

What Are the Benefits of Updating a Life Insurance Policy?

The advantages of updating an old policy are substantial, both in the short and long term.

In the scenario discussed, the upgraded policy increased the death benefit from $589,000 to $825,000 over 15 years.

Cash value projections also improved. While the old policy was expected to grow to $380,000 in 15 years, the new policy projected $425,000.

Perhaps the most critical improvement was the addition of a chronic and critical illness rider.

This feature allows the policyholder to access up to 80% of the death benefit—$320,000 in this case—if they are unable to perform two of six daily living activities for 90 consecutive days.

This enhancement ensures that long-term care costs can be covered without depleting other investments or savings.

Why Is It Important to Review a Life Insurance Policy Regularly?

Life insurance products evolve to keep up with market demands. Newer policies often offer better features, lower costs, and greater flexibility.

Reviewing older plans allows policyholders to identify outdated aspects and explore opportunities for improvement.

By working with an experienced insurance professional, policyholders can ensure their coverage is aligned with their financial goals and current needs.

As this scenario illustrates, upgrading a life insurance policy is a smart way to enhance benefits, address gaps in coverage, and gain financial peace of mind.

Conclusion

Updating an old life insurance policy isn’t just about better numbers—it’s about peace of mind and financial security. Whether you’re looking to add critical features like chronic illness riders or maximize your policy’s value, a simple review could uncover significant opportunities to improve your coverage.

At Biaggi Life, it’s not about making a sale—it’s about telling you how it really is.

With Frank Biaggi’s expertise, you get honest, straightforward advice from a seasoned professional who understands the complexities of life insurance.

Don’t wait until it’s too late to make the changes you need—explore your options and secure a policy that works for you now and in the future.