Life Insurance

Minors can’t legally own a life insurance policy or take possession of a death benefit. If a child is named directly, a court may have to appoint a guardian, adding delay and expense. For many families, a Uniform Transfers to Minors Act (UTMA) designation is the simplest solution.

How a UTMA designation works

A UTMA designation is created in the beneficiary designation itself. It works like a “poor person’s trust” when a formal trust is too costly or complicated. A custodian is appointed to manage the policy proceeds for the child according to the directives in the state’s UTMA.

Details to get right

• Name a successor custodian. The custodian may die before the child reaches adulthood.
• Follow state law. The wording must comply with the governing state’s UTMA, and the age of majority differs by state.
• Check with the carrier. Confirm the wording with the carrier’s claims department.
• One designation per child. Each minor beneficiary needs a full, separate designation.
• Plan for contingent minors. Contingent beneficiaries who are minors need the same care.

A UTMA designation almost always needs a separate page attached to the application.

The main limitation: control ends at majority

When the child reaches the age of majority, the custodian must turn over the proceeds outright. Unlike a trust, a UTMA can’t delay control well into adulthood. For larger amounts, or when parents want distributions staged over time, a formal trust is usually better. See our guide to trust types for options.

Make beneficiary reviews part of your service

Births, deaths, divorces and remarriages all change who should be named and how. Reviewing designations regularly, especially when children are involved, protects the family and builds trust with your clients. Contact us with questions or for help with a case involving minors.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Term insurance is often sold as the lowest-cost way to cover a need for a set period. Then it’s forgotten until the level period ends and the premium jumps. A simple conversion review process keeps clients protected and creates natural opportunities for permanent coverage.

Why term clients need follow-up

The idea of “buy term and invest the difference” works only if the difference is actually invested. More often, clients pay the term premium and spend the savings elsewhere. Years later, the level period ends, the premium rises sharply and the coverage lapses just as the client’s health and age make new coverage harder to get.

How term conversion works

A conversion option lets the client exchange term coverage for a permanent policy without additional underwriting. Key points:

• Conversion is usually allowed until a certain age, commonly 65, 70 or 75, or until the end of a set conversion period.
• The premium is based on the insured’s attained age at conversion, so earlier conversions generally cost less.
• Conversion is especially valuable if the client’s health has changed since the policy was issued.

Conversion rules vary by carrier and product, including which permanent products are eligible.

Build a review process

Set a regular review for every term client, and flag clients approaching conversion deadlines. Even when converting isn’t right yet, the conversation often uncovers new needs or leads to referrals. Some clients may also benefit from newer product features; see our article on carrier upgrade programs.

How SRS helps

We can confirm whether a client’s term policy has a conversion option, check deadlines and eligible products, and provide marketing support to turn those reviews into permanent sales. Contact us with a list of term clients you’d like reviewed.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Clients’ lives change every year, but they rarely stop to think about life insurance when they do. A new home, a new baby or a promotion changes what they need, and it falls to the advisor to notice. A simple review process tied to life events keeps clients properly covered and opens new conversations.

Life events that change coverage needs

• Buying a home. A new mortgage raises the amount a family would need to stay in place.
• A birth or adoption. More dependents and more years of support.
• Marriage or divorce. New obligations, and beneficiary designations that may need updating.
• A promotion or raise. More income to replace. See our article on income multiples for sizing coverage.
• Starting or buying a business. New debts and key person needs.
• A death in the family or new caregiving role.

Adding coverage at the same rate class

Clients who bought coverage recently sometimes want more. One carrier we work with lets clients add a new policy at the same underwriting class as a recently placed policy. The amount available depends on how long ago the coverage was placed and the approved rating. Contact us to check whether a client may qualify, and confirm current program availability.

Reviewing existing coverage for value

A review is also a chance to make sure a client’s current coverage is still cost-effective. A client with substantial cash value who only needs death benefit protection may be able to use a 1035 exchange into a new policy, paying the same premium for a higher guaranteed death benefit. Carrier upgrade programs are another option to explore.

Make reviews a system

The key is having a system: ask about life changes at every meeting, send annual review reminders and track key dates. Our Policy Review Kit includes sample approach letters and talking points. Contact us for a copy or for help with any policy review.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Before a case goes through medical underwriting, it pays to know how much coverage a carrier will actually issue. That’s especially true for a non-working spouse, where financial underwriting rules vary widely. On one recent case, the same request drew offers ranging from $1 million to $5 million.

The case

A physician earning $500,000 a year already had $5 million of coverage in force on himself. He wanted $5 million on his wife, who did not work outside the home. If he lost her, he planned to stop working and stay home with their children. She had $1.8 million in force that would be replaced.

The need was real and clearly explained. The question was which carriers would agree.

Five carriers, five different answers

Before any medical underwriting, we asked carriers how much they would consider on the non-working spouse. The range was striking:

• Carrier A: $1,000,000. It felt she was already over-insured.
• Carrier B: $1,500,000. A low reinsurance limit made anything larger hard to justify.
• Carrier C: $2,500,000. A strong carrier willing to match 100% of the working spouse’s coverage, but only up to $2.5 million.
• Carrier D: $5,000,000. No additional questions.
• Carrier E: $5,000,000. No additional questions.

Had the application gone to Carrier A or B first, the client would have waited through underwriting only to be offered a fraction of what he needed.

Why carriers differ

Financial underwriting guidelines for non-earning family members reflect each carrier’s philosophy, reinsurance arrangements and retention. Common factors include:

• The amount in force and applied for on the working spouse
• Household income and net worth
• The stated purpose of the coverage, such as childcare and lost income if the surviving spouse stops working
• Existing coverage being replaced

Our article on financial underwriting covers how carriers justify large face amounts more generally.

Shop the limit before the medical

For larger requests on a non-working spouse, or any family member who isn’t the primary earner, confirm the financial limit first. It’s one more reason price alone shouldn’t decide where a case goes.

Send us the details and our team will do the legwork, identify carriers that will support the amount, and explain other reasons one carrier may be a better fit than another.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Figuring out the right amount of life insurance is still a mystery for many clients, and many households remain underinsured. A careful survivor needs analysis is rare, yet it’s the most reliable way to protect a family. Here are four classic methods and when each is useful.

1. Multiple-of-earnings method

This method sets coverage at a multiple of annual income, often somewhere between four and eight times salary. It’s quick and easy, but the least reliable, because it overlooks family size, living expenses, debt and stage of life. Our article on income multiples covers how carriers use multiples in underwriting.

2. Capital needs analysis

This method calculates the capital needed, at an assumed rate of return, to replace the insured’s income without ever spending principal. The full amount passes to heirs. It maximizes the ultimate estate but generally overstates the insurance needed to replace lost income.

3. Human life value

Human life value measures the present value of the income the insured would have earned for dependents, sometimes adjusted for inflation and mortality. Because it assumes steadily rising pay and lifestyle, it can overstate the need compared with a family’s current standard of living.

4. Comprehensive needs analysis

This is the most complete approach. It adds up:

• Immediate cash needs and final expenses
• Mortgage and debt payoff
• Ongoing income replacement
• College funding

It then accounts for inflation, time value of money, taxes, existing savings, existing coverage and Social Security survivor benefits. The inputs come from a thorough fact finder. Categories can include family needs, business needs, buy-sell planning, estate liquidity and retirement. Not every question applies to every client, but working through them surfaces needs clients may have overlooked.

Contact us for our fact finding tools and help zeroing in on the right amount for each client.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

When a life insurance policy changes hands, someone has to put a value on it, and the IRS cares a great deal about that number. Yet there is no single, simple rule for valuing an in-force policy. The good news for advisors: determining value isn’t your job, but you can make the process much easier.

When policy valuation matters

Fair market value is generally the price a willing buyer and willing seller would agree on, neither under pressure and both knowing the relevant facts. Life insurance transfers rarely look like that. Common situations include:

• Business to employee: an employer rolls a key person policy out to a retiring executive. The employer may be glad to undervalue it so the employee reports less income.
• Qualified plan distributions: the plan trustee doesn’t care about the value, but the participant who must report it as income, possibly with a 10% early distribution penalty, prefers it low.
• Gifts: the donor is already in a giving mindset, so a lower value simply means a smaller taxable gift.

Because the parties’ interests often line up rather than conflict, the IRS takes a close look.

Why there’s no easy answer

Congress, the IRS and the courts haven’t produced one clear framework. Instead, taxpayers face a patchwork of rules that vary with the type of transfer, the type of policy and interpretation of the facts. Different contexts may point to different measures of value.

What advisors should do

Rendering a valuation opinion is outside an insurance advisor’s professional role. What you can do is request the carrier’s Form 712 or a similar valuation statement. You may receive several figures, such as:

• Interpolated terminal reserve (the most common)
• Accumulated cash value and cash surrender value
• PERC (premiums, earnings, reasonable charges) value
• Premiums paid
• Tax and statutory reserves

Pass these to the client’s attorney, CPA or qualified appraiser to support their valuation. That’s more help than most advisors provide. Our article on gifting strategies covers one situation where valuation often comes up.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Most clients think of life insurance as something that pays only when they die. Many of the policies they bought years ago work exactly that way. A structured policy review shows whether newer designs could do more for them while they are still living.

“Old insurance” vs. “new insurance”

The death benefit is still the core reason most people buy life insurance. But the term “old insurance” describes policies that offer little beyond that death benefit. “New insurance” describes coverage where the client doesn’t have to die for the policy to deliver value.

Long-term care, chronic illness and critical illness riders are good examples. These features were not common around the turn of the century, and many in-force policies simply don’t have them.

What a policy review can uncover

Clients’ needs change, and their coverage often doesn’t keep up. A review may show that:

• The face amount no longer matches the real need, up or down.
• Living benefit riders could be added through a new policy.
• A modern indexed UL could offer tax-favored accumulation and tax-free income through properly structured withdrawals and loans.
• Current pricing, or an improved health rating, may make new coverage more efficient than the old policy.

Any replacement needs a careful side-by-side comparison, including surrender charges, new contestability periods and underwriting. Our team can help you build that comparison. For clients whose health has changed, see our note on carrier upgrade programs.

Cash value as part of the retirement picture

For clients who earn too much to contribute to a Roth IRA, or who have already hit contribution limits, indexed UL can act as a supplemental source of tax-advantaged retirement income. For younger clients, cash value life insurance adds a diversified accumulation bucket alongside their investment portfolio. The policy must be designed and funded properly, and clients should understand that loans and withdrawals reduce the death benefit and can cause a lapse if not managed.

How to start the conversation

Don’t let your clients hear this story from another agent. SRS can provide turnkey policy review materials and help you build a short list of talking points to open the conversation about existing coverage. Simple questions work well: When did you last look at this policy? Has your health, income or family changed since then? Would a benefit you could use while living matter to you?

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Clients who have maxed out their retirement plans, or who earn too much to contribute to a Roth IRA, often ask where else they can save on a tax-advantaged basis. A properly overfunded universal life policy shares many of the Roth’s best features and adds a few of its own. Here is how the two compare.

The Roth IRA and its limits

A Roth IRA works like a reverse traditional IRA: contributions go in after tax and qualified distributions come out tax-free. The catch is access. Higher earners may be phased out entirely, and everyone faces a relatively small annual contribution limit set by the IRS.

Feature-by-feature comparison

• Eligibility: Roth IRA — subject to income limits. Overfunded UL — the client must be insurable.
• Contribution limits: Roth IRA — annual IRS limit. UL — no fixed dollar cap; funding is limited by the death benefit and federal tax rules for life insurance.
• Deductible contributions: No for both.
• Tax-deferred growth: Yes for both.
• Tax-free income: Roth — qualified distributions. UL — withdrawals up to basis, then policy loans.
• Early access penalty: Roth — possible penalty on early earnings withdrawals. UL — no 10% penalty as long as the policy is not a MEC.
• Completes the goal at early death: Roth — no. UL — yes; the death benefit delivers the result.
• Estate tax protection: Roth — no. UL — possible with trust ownership.

Design matters

The strategy only works when the policy is funded near the top of what the tax rules allow without becoming a modified endowment contract (MEC). A MEC loses the favorable tax treatment of loans and withdrawals. Clients should also understand that loans reduce the death benefit and an underfunded or over-borrowed policy can lapse, creating a tax bill. Our team can help you model a design that balances accumulation, cost and protection.

Where it fits: executive bonus plans

The same idea strengthens executive bonus arrangements. When the policy is designed as an overfunded contract and the retirement income potential is explained at the start, the benefit feels far more valuable to the executive. Clients are generally more open to using life insurance for retirement once they see how closely it resembles a Roth IRA.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Clients buy guaranteed universal life for dependable lifetime protection. But needs change over the years. A return of premium feature available on some GUL policies gives clients a built-in exit strategy, and it opens up several practical planning uses.

How the return of premium feature works

With one design we’ve seen, the client buys a guaranteed universal life policy and pays the premium required to guarantee the death benefit to age 100. At the 15th, 20th and 25th policy anniversaries, the client has a 60-day window to surrender the policy and receive their paid premiums back. If they don’t use the window, the policy continues unchanged. Features, timing and cost vary by carrier, so confirm current availability and terms.

Four ways clients can use it

1. Retirement. A 45-year-old has 20 years of death benefit protection. At 65, she takes her premiums back to supplement retirement income.
2. College costs. A parent with young children owns two permanent policies, one a GUL with return of premium. Once the children reach college age and the family’s coverage needs change, he surrenders the GUL in year 15, 20 or 25 and uses the cash for tuition.
3. Business planning. A business owner buys GUL to protect her company against the loss of a key employee. The employee resigns in year 18; at the 20-year window, she receives her premiums back.
4. Paying up another policy. A 55-year-old needs $5 million of coverage and buys two GULs, $2 million and $3 million. At 75 he needs less. He surrenders the $2 million policy and uses the cash to pay up the $3 million policy, leaving him with no further premiums.

Why it helps the sale

The biggest objection to permanent coverage is the fear of paying premiums for decades and getting nothing back if plans change. A return of premium option answers that objection directly. It also creates natural review points at each anniversary window. For key person uses, see how much key person coverage a business can buy.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →

Permanent life insurance is often sold on the death benefit alone. But many clients get the most value from what a policy can do while they are alive. Explaining those living benefits helps clients see one plan addressing several needs.

What “living benefits” means

Living benefits are the ways a permanent policy delivers value before the insured dies. They include cash value that grows tax-deferred and can be accessed, and riders that pay part of the death benefit early if the insured has a qualifying illness or needs long-term care.

Cash value access

• Tax-deferred growth on the policy’s cash value.
• Tax-free income through withdrawals up to basis and policy loans, when structured properly and the policy is not a MEC.
• Flexible premium payments on many designs.
• No required minimum distributions, unlike IRAs and 401(k)s.

Loans and withdrawals reduce the death benefit and need monitoring to avoid a lapse.

Chronic illness and long-term care benefits

Close to 70% of people turning 65 will need some long-term care. CareScout’s 2025 national medians put in-home care at $35 an hour and a private nursing home room at $10,798 a month. An LTC or chronic illness rider lets clients use part of the death benefit, generally tax-free, to help cover those costs. Learn more about LTC riders on life insurance.

Who to talk to

Successful clients aged 30 to 50 with young families are often ideal candidates. Look for clients who value a plan that covers multiple needs rather than simply the lowest price. Some carriers also offer wellness programs that reward healthy habits with premium savings; confirm current availability. Our team can help you compare products for a budget of a few hundred dollars a month.

Frequently asked questions

Reviewed by Tim Fuller on 2026-09-26

Tim Fuller

President, SRS Inc.

Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.

Connect on LinkedIn →