Does this policy still belong in the plan?

Start with whether the client still needs the death benefit and whether the ongoing cost fits the plan. Owning a permanent policy does not, by itself, justify continuing it. Keeping, changing or ending coverage should each be considered against the client's current needs and available alternatives.

Where coverage is still needed, compare ways to meet the same obligation and duration. Include term coverage where available and relevant, along with resources already in the plan. Examine future premiums, charges and limits on access to the policy's value.

Aligned Path Insurance Solutions can help a financial advisor understand an existing whole-life or universal-life contract. The advisor supplies the planning context; the insurer confirms contract details and current policy status. Tax or ownership changes may also need the client's tax professional or attorney.

Start with a specific question and the records available through our policy review process. The review may support keeping the policy, making a change or ending coverage. A detailed funding analysis or comparison is a possible next step, based on what the question requires.

Is there still a need for this coverage?

Write down the obligation the death benefit is intended to fund, its amount and duration, and who needs access to it. Has a dependent's need, business agreement, estate plan or household income changed? The main life insurance guide covers that needs-and-duration discussion.

Then identify the concern: a payment notice, rising loan balance, lower illustrated values, cash-flow pressure, or a proposed replacement. A disappointing projection and a coverage need that has ended are different reasons to review a policy. Neither establishes the answer on its own.

Which records could change the answer?

You do not need every record to ask for help. For a decision involving long-term funding or replacement, these records may become useful as the scope becomes clear.

Latest statement

A dated snapshot of benefits, values, premiums and loans. It describes the current position; it does not establish what future funding will be sufficient.

Contract and riders

The actual provisions governing premiums, guarantees, loans, surrender, maturity and benefits. Confirm that amendments and any later changes are included.

Current in-force illustration

An updated projection for the policy already owned. Ask the carrier to use the actual premium history, current values and outstanding loans, with the future payment and loan assumptions clearly identified.

Carrier confirmations

Where relevant: current guarantee status, funding needed for the intended duration, net surrender value, loan balance and interest, tax basis and modified endowment contract (MEC) status. Request explanations of discrepancies.

Keep the original sales illustration for context, but use current carrier records for the present decision. Label each document with its effective date and each unresolved point with the person responsible for confirming it.

For a lapse or payment deadline, contact the insurer promptly. A request for review or a new illustration does not pause the deadline.

What is guaranteed, and what is illustrated?

A projection is meaningful only with its assumptions. The NAIC's illustration guidance distinguishes guaranteed elements from non-guaranteed elements and explains updated in-force illustrations.

Ask for relevant scenarios using the same starting date, benefits, loan position and intended coverage duration. Compare the current assumptions with guaranteed values and, where available, less favorable assumptions. A projection that shows premiums stopping in a future year needs a separate check of whether that stop date is guaranteed.

What must happen for coverage to continue?

For universal life, a planned premium may depend on assumed credits and charges. It is not automatically the amount that guarantees the desired duration. New York DFS explains how expense and insurance charges, credited interest and premium payments affect policy values.

• Payments and charges: What has actually been paid, and when? What are the current and maximum contractual charges? Ask the carrier to identify any funding shortfall and the effect of changing future payments.
• Guarantee conditions: A no-lapse guarantee may depend on payment timing and other contract conditions. Confirm its status and duration before assuming that a positive cash value or a familiar premium amount proves coverage will last.
• Dividends and loans: Participating whole-life dividends are not guaranteed. If they pay premiums or buy additional coverage, test a lower-dividend scenario. For a loan, identify the balance, interest rate, unpaid interest and future borrowing or repayment assumptions.

Loans can reduce the benefit available at death and increase lapse risk. A lapse or surrender with debt can also create a tax consequence even when little cash is received. Ask the carrier and tax professional to review that exposure before taking action. Northwestern Mutual’s explanation of policy loans provides general background; the client's contract governs the terms.

What does each decision path require?

Use these questions as a discussion reference. They do not produce a score or a recommendation for a particular client.

• Keep

  Decision question

  Does the existing coverage still serve the plan at a funding level the client can maintain?

  What to confirm

  The benefits, guarantee conditions, funding, loan position and net surrender value that would remain in the policy. Document a follow-up date and what would trigger another review.

• Adjust

  Decision question

  Can a change within the existing contract address the concern?

  What to confirm

  Available premium, benefit, rider or dividend options. Ask whether a reduced paid-up option exists, and how any change affects guarantees, values, taxes and future flexibility.

• Replace

  Decision question

  What specific improvement would justify giving up the existing policy?

  What to confirm

  The coverage type and duration, an actual new offer, required funding, guarantees and total change costs. Account for underwriting, surrendered benefits, charges, loans, tax treatment and new policy provisions.

• End coverage

  Decision question

  Has the coverage need ended, or can the plan meet it without this policy?

  What to confirm

  The coverage being given up, net surrender proceeds, charges, loan treatment and possible taxes. Confirm any needed alternative coverage is in force before ending the policy.

Compare future obligations and benefits from today. Past premiums help establish the policy history and tax basis, but do not by themselves establish whether keeping or changing coverage serves the current plan. If the need has ended, review surrender alongside the other options, including lost coverage, net proceeds and taxes. A replacement needs its own justification; concern about the existing policy does not establish a need for a new permanent policy.

If replacement is being considered

A new illustration is not an underwriting offer. Age and health can affect availability and price. Compare guarantees and required funding across the same coverage period, along with riders and benefits that would be lost. Account for existing surrender charges and any new surrender-charge schedule.

Check whether contestability and suicide provisions start again, and which replacement disclosures and procedures apply in the client's state. New York DFS's replacement discussion illustrates why these details matter; state rules and contracts vary. Confirm any needed new coverage is in force and the transition is coordinated before ending existing coverage.

Which issues need tax or legal coordination?

Surrender proceeds above the investment in the contract can be taxable. Ask for the carrier's tax-basis and loan records rather than equating premiums paid with basis. MEC status can change the taxation of distributions and loans. Have the client's tax professional evaluate the proposed action before it occurs.

A qualifying Section 1035 exchange may permit nonrecognition of gain. It does not remove surrender charges or preserve every benefit. Loans and the transaction structure need review; a cash surrender followed by a purchase should not be assumed to qualify.

Confirm the owner, insured, beneficiary and any assignment. Trust-owned and business-owned policies, or changes to ownership and beneficiaries, may require the attorney and tax professional to coordinate with the insurer. This guide is general insurance education, not personalized tax, legal or investment advice.

Variable life policies require a securities professional. Aligned Path does not offer variable life insurance or securities advice.

What remains unresolved after the first conversation?

A statement may explain a current value without proving future adequacy. An illustration can show a scenario without confirming that a guarantee remains intact. A preliminary quote cannot establish a replacement's final terms. Record what is known, the carrier confirmations still needed, and any pending tax or legal questions before making a decision.

For a broader initial concern, the existing-policy review tool can organize topics and records. Its screening output is a starting point for human review.

Sources and scope

Primary sources checked October 6, 2026. State consumer guides explain general mechanics and tradeoffs; the policy, carrier confirmation and applicable state rules govern the actual case.

• NAIC: Life Insurance Buyer's Guide
• NAIC: Life Insurance Illustrations
• New York DFS: Life Insurance Information for Consumers
• New York DFS: Life Insurance FAQ and replacement considerations
• Insurer background — Northwestern Mutual: Borrowing Against Life Insurance
• Texas Department of Insurance: Life insurance guide
• IRS Publication 525: Taxable and Nontaxable Income
• 26 USC Section 1035: Certain exchanges of insurance policies
• IRS Revenue Ruling 2007-38: MEC aggregation and distributions