Somewhere in your financial picture, there is likely a life insurance policy that was purchased with great care, at a specific moment, for a specific reason — and that has not been meaningfully reviewed since.
That is not a criticism. It is simply how life insurance tends to work. Unlike an investment portfolio where performance can readily be discerned, or a tax return that forces an annual reckoning, a life insurance policy can sit quietly in the background for years, premiums paid on schedule, without ever prompting the question of whether it still does what it was designed to do.
For most people, that quiet persistence is not a problem. For high-net-worth families and business owners with significant policies in force — particularly permanent life insurance purchased to address estate liquidity, business succession, or wealth transfer goals — it deserves a closer look.
1. The Estate Tax Landscape Has Changed, and Your Policy May Not Have Kept Pace
For families who purchased large death benefit policies specifically to address estate tax liability, the passage of the One Big Beautiful Bill Act earlier this year is directly relevant. The federal estate, gift, and generation-skipping transfer tax exemption is now permanently set at $15 million per individual, $30 million per married couple — a substantial increase from the levels many existing policies were sized against, and a resolution of the sunset uncertainty that shaped planning for years prior.
This creates two distinct scenarios worth examining.
For some families, the higher exemption means a policy that was sized to cover an anticipated estate tax liability may now be larger than necessary. That is not automatically a problem — life insurance inside an irrevocable trust often serves purposes beyond pure estate tax coverage, including wealth transfer, liquidity for heirs, and equalization among beneficiaries who may inherit different types of assets. But it is worth understanding explicitly what the policy is now accomplishing, rather than assuming the original rationale still applies unchanged.
For other families, particularly those whose estates have grown significantly since the policy was purchased — through business growth, investment performance, or additional real estate and asset accumulation — the opposite may be true. A policy that was appropriately sized when purchased may now be meaningfully undersized relative to the estate it was meant to help address.
Either direction is worth knowing. Neither is something a policy reveals on its own.
2. Permanent Life Insurance Requires Active Management, Not Just Premium Payments
This is the part of life insurance ownership that catches the most people off guard: a permanent life insurance policy is not a static product. It is a financial instrument with internal performance dynamics that change over time, and those dynamics deserve periodic review.
Universal life policies, in particular, are built around an internal cash value account that earns interest or investment returns depending on the policy type, and that account is what funds the policy’s ongoing cost of insurance as the insured ages. When interest rates or investment performance fall short of the original design’s assumptions, the cash value can grow more slowly than projected — which, left unaddressed, can eventually require increased premium payments to keep the policy from lapsing, sometimes catching policyholders by surprise decades after purchase.
This is not a hypothetical concern. Permanent life policies purchased during periods of higher interest rate assumptions, and then held through years of lower rates, may require monitoring and adjusting as conditions change. A policy that has not been reviewed through an in-force illustration — a updated projection of the policy’s performance based on actual, current results rather than original assumptions — is a policy whose trajectory is essentially unknown to its owner.
An in-force illustration is a straightforward request to make of a policy’s carrier, and it is the single most useful tool for understanding whether a permanent policy is on track, underperforming, or in need of adjustment.
3. Business Circumstances Change Faster Than Insurance Policies Do
For business owners who purchased life insurance to fund a buy-sell agreement, key person coverage, or executive benefit obligations, business changes are a particularly common reason that coverage drifts out of alignment.
A buy-sell agreement funded with life insurance is only as good as its underlying valuation assumptions. If the policy’s death benefit was set based on the business’s value five or ten years ago, and the business has grown substantially since, the funding may no longer be adequate to execute the agreement as intended. The reverse is also possible — a business that has contracted or changed structure may now be over-insured relative to its current valuation. Of critical importance, a 2024 Supreme Court decision means that all buyout agreements should reviewed by counsel, particularly if the shareholders are family members.
Key person coverage deserves similar scrutiny. If the policy was purchased to protect against the loss of a specific executive or partner, and that individual’s role, compensation, or importance to the business has changed — or if new key personnel have joined without corresponding coverage — the original policy may no longer reflect the actual risk profile of the business.
These are not failures of the original planning. They are simply the natural consequence of a business that has continued to evolve while a policy, by its nature, has not.
4. Beneficiary Designations Are Easy to Overlook and Important to Get Right
Life insurance proceeds pass to beneficiaries by contract, entirely outside of a will or revocable trust. This makes the accuracy of beneficiary designations one of the highest-leverage details in an entire estate plan — and one of the most commonly neglected.
A policy purchased before a marriage, a divorce, the birth of additional children, or the death of a previously named beneficiary may still list outdated information, simply because updating a beneficiary designation requires proactively contacting the carrier rather than happening automatically through any other estate planning update.
For policies held inside an irrevocable life insurance trust, the structure is somewhat different — the trust itself is typically the beneficiary, and the trust document controls how proceeds are ultimately distributed. But this makes it equally important to confirm that the trust document still reflects current family circumstances and wishes,as a trust drafted years ago may no longer be aligned with the objectives of the Grantor. While the trust cannot be amended to reflect current philosophy, it may be possible to transfer the policy to a new trust.
5. What a Thorough Life Insurance Review Actually Involves
A meaningful policy review is not complicated, but it does require gathering specific information and asking direct questions:
- Request an in-force illustration from your life insurance advisor for any permanent life insurance policy, showing current performance against original projections.
- Confirm the death benefit against current need, factoring in the new estate tax exemption levels, current estate value, and the policy’s actual purpose — estate liquidity, wealth transfer, business succession, or income replacement.
- Review beneficiary designations on every policy. For policies owned in trust, review the trust’s beneficiaries.
- For business-related policies, confirm that coverage amounts still align with current business valuation and ownership structure, and alignment with the Connelly decision by the Supreme Court.
- Evaluate whether the policy structure still fits, particularly for older permanent policies that may benefit from a 1035 exchange into a more efficient or better-performing product, executed without triggering a taxable event.
None of these steps require urgency or alarm. They require the kind of periodic attention that any significant, long-term financial commitment deserves.
A Policy Purchased Once Should Not Be Forgotten for Decades
Life insurance, particularly for ultra-affluent families addressing estate liquidity or business owners protecting succession plans, is designed to function over remarkably long time horizons — often forty or fifty years from purchase to claim. A commitment of that length deserves periodic reassessment, not a single decision made once and never revisited.
At Lindberg & Ripple, our specialization in large-death-benefit life insurance includes the ongoing management of policies long after they are placed — monitoring performance, carrier financial viability, and ensuring that coverage continues to reflect the family or business circumstances it was designed to protect. If it has been several years since your policies were reviewed, that review is worth scheduling now, before the gap between what your policy was designed to do and what it is actually doing grows any wider.
File # 5725683