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Why you should review contracts regularly

Contracts need servicing, much like a car. The difference: an old contract can often be brought up to scratch more easily than a used car. The older the contract, the more a check-up pays off. According to the German Insurance Association (GDV), there are more than 80 million life insurance contracts in Germany. Many of them are older contracts with room for improvement. So that you can track down weak spots reliably, here is how to approach a contract review step by step.

1. Gather the documents

A thorough review rests on a solid foundation. Make sure you have all the contract documents and all other relevant paperwork: policies and endorsements, general insurance conditions, the product information sheet, fund and cost overviews, advice records and annual statements.

Good for the client: your careful approach shows them that their interests are taken seriously.

Good for you: a complete picture ensures quality advice and helps reduce your liability risk.

2. Record the contract data

Every analysis starts with systematically recording the key data. This includes the insurer, product name, tariff name, contract start date, term, sums insured, beneficiaries and contract status.

Good for the client: highlighting the contract data makes it easier for them to get back into the topic.

Good for you: starting from a good position, you get an initial overview of the bigger picture.

3. Trace the contributions

Look at how much the client pays into the contract regularly and whether there have been any adjustments over time. There may be automatic contribution increases, or contribution holidays may have been requested. The key question: does the current contribution level still fit the agreed objective?

Good for the client: the contribution review alone can reveal room for improvement.

Good for you: knowing the contribution situation lets you make a plausible case for any adjustments or additional payments.

4. Understand the life situation

A contract is only good if it serves the client's goals. That is why it is part of your job to check the existing terms against their current life situation. Changes in family, work or finances can make adjustments necessary.

Good for the client: the insurance cover is tailored precisely to their needs.

Good for you: your client-centred approach builds trust.

5. Analyse the scope of benefits

First, take a close look at the insurance conditions (for example deadlines and exclusions). Then check whether the contractually agreed benefits are still appropriate, such as the unit-linked pension or the maturity benefit of a life insurance policy. A new tariff may offer measurable advantages.

Good for the client: the groundwork is laid for improving the insurance cover for the long term.

Good for you: if things have gone off course, you can show alternative solutions.

6. Check the investment structure

Portfolio performance depends largely on the choice of funds. Look at the performance first. Then check whether the investments are spread in a way that matches the client's risk profile. This shows you whether a fund switch (Switch) or a reallocation (Shift) makes sense. With Liechtenstein Life, both are free of charge.

Good for the client: if returns have been weak so far, new growth opportunities now open up.

Good for you: your capital market expertise demonstrates all-round advisory quality.

7. Disclose the cost structure

Ideally, the client already knows that the (gross) policy is paid for out of their contributions or contract balance. In practice, however, this is often not the case. Point it out explicitly, especially when contract changes give rise to new costs. Sometimes the review also uncovers unnecessary costs that can be saved in future.

Good for the client: knowing the costs brings clarity and helps them make informed decisions.

Good for you: cost transparency makes you credible and trustworthy.

8. Make recommendations

If the review shows that action is needed, your analysis has also given you a sound basis for decisions. You can now recommend contract improvements to the client with a clear conscience and make tailored proposals.

Good for the client: the chances increase that their contract will perform well in future.

Good for you: stronger client loyalty outweighs the additional remuneration.

9. Document everything

If the contract review is followed by advice, you are legally required to document all review steps, analyses and recommendations. You then make all the documents available to the client. With Liechtenstein Life, all of this is digital: clients can view their contract in the customer app, and intermediaries have access via the Partner Life platform.

Good for the client: transparency provides peace of mind, especially when all documents are stored centrally in the app.

Good for you: documentation lets you prove the quality of your work.

Conclusion: put your foot down!

If contracts need servicing like cars, then your work for your clients is like a long rally: the start matters, but the race strategy decides the outcome. A structured contract review is a central part of strategic client care, and it lets you prove the quality of your advice. That gives you a clear lead over the competition.

Article published by Prosperity Solutions AG