May 1, 2005 12:00 PM, By Charles Ratner, national director, Personal Insurance Counseling, Ernst & Young, Cleveland

By: By Charles Ratner, national director, Personal Insurance Counseling, Ernst & Young, Cleveland

Many of our clients who bought cash value life insurance policies are taking a hard look at their policies in light of changed circumstances or a changed planning environment. Whether it's because of personal cash flow issues, reassessment of the underlying coverage needs, or gift or estate tax considerations, clients sometimes ask advisors what to do with their policies.

Two common situations demonstrate the ways in which planners are being called upon to help clients make some pretty tough decisions. In one, the insured person believes he doesn't need the coverage anymore and wants options for turning the policy into cash. In the other, the insured has an irrevocable life insurance trust (ILIT) and needs the coverage, but is having difficulty paying premiums, either because of cash flow or because gifts of premium to the ILIT are now generating gift tax.

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