Somewhere in most affluent households is a permanent life insurance policy that was bought for a clear reason. A young family, a new mortgage, a business partner, a bank that required it. The reason was good. Then the reason changed, and the policy did not. It moved into a drawer, the premium moved onto autopay, and a living document became a filed one.
The premium keeps going out long after the reason stopped coming in. An accountant sees the check every year. The family sees a line on a statement. Almost nobody reads the contract, because nothing about it appears to be broken.
What a policy is for, and whether that is still true
Every permanent policy was purchased to do a job. Replace income. Fund a buy-sell agreement. Pay an estate tax bill. Equalize an inheritance between a child who runs the business and one who does not. The first question in any review is simply whether the job still exists. Estate tax thresholds have moved many times. Businesses have been sold. Children have grown up and become wealthy on their own. A policy whose job has ended is not necessarily a policy to get rid of, but it is a policy whose continued existence deserves a decision rather than a habit.
Who owns it matters as much as what it is worth
Ownership is the part families rarely think about and professionals think about constantly. A policy owned by the insured is generally counted in the insured’s estate. A policy owned by a trust, a spouse, or a business follows different rules, and the right answer depends on why the policy exists and what the rest of the estate plan is trying to do. Ownership was usually decided on the day of purchase, by whoever filled in the application, and it has often never been reconsidered. The beneficiary line has the same history.
How it is funded, and what the illustration assumed
Permanent policies were sold with an illustration: a projection of premiums, cash value, and death benefit under a set of assumptions. Those assumptions were made years ago about interest rates, dividends, and costs. Some policies have performed better than illustrated. Many have not. A policy that was supposed to be paid up by now may still be billing. A policy that was supposed to hold its death benefit may be quietly eroding. The only way to know is to request a current in-force illustration from the carrier and read it against the original. That is a phone call, and it is almost never made.
“The premium keeps going out long after the reason stopped coming in.”
The review is the point
None of this argues for any particular decision. Some policies, on review, turn out to be doing exactly what they were built to do and are worth every dollar. Others have drifted far from their purpose. The point is that a permanent policy is a significant asset with a significant cost, and it deserves the same reading every few years that a family would give a property or a business interest. Inside the Cascade Strategy, insurance occupies two of the ten parts, and the first question asked of every policy is the same: what is it for, and is that still true?