A missed $309 premium shortfall reduced a $10M policy guarantee by 19 years—until our policy management team identified the issue, corrected the funding gap, and restored the original guarantee.
Case At A Glance
The Situation
Bill and Helen, ages 74 and 72, purchased a $10M survivorship variable universal life policy with a secondary guarantee designed to provide coverage through age 100.*
The policy was owned in trust and structured to be funded through five annual premium installments of $500,309.
On paper, the plan appeared straightforward: make the scheduled payments, preserve the guarantee, and maintain long-term protection. But one small discrepancy changed the policy’s projected outcome.
What Went Wrong
In year four, the trustee mistakenly sent a premium check for $500,000 instead of the full required amount of $500,309. The difference was only $309.
But that small shortfall had a significant consequence: the policy’s guaranteed coverage age was reduced from age 100 to age 81. What looked like a minor payment error created a 19-year reduction in guaranteed protection.
What Was At Risk
Age 100 → Age 81
19 Years Of Guaranteed Coverage At Risk
The client was unaware that the guarantee had changed.
Without active monitoring, the policy could have continued forward under a very different outcome than originally intended. The coverage that was expected to last through age 100 had been reduced far below life expectancy.
This is where small administrative errors can become major policy risks.
The Resolution
After identifying the shortfall and its impact, the policy management team arranged for a corrective premium payment of $500,750 in year five.
This restored the policy to its original guarantee and brought the coverage strategy back in alignment with the client’s intent. The policy is now scheduled for ongoing performance monitoring to help prevent future issues from going unnoticed.
The Takeaway
A $309 mistake nearly created a 19-year gap in guaranteed coverage.
This case highlights why life insurance policies should not be treated as static documents. Even well-designed policies can drift off course without active review, proper funding oversight, and ongoing performance monitoring.
Could A Small Policy Issue Be Hiding In Plain Sight?
Aurum helps trustees, attorneys, CPAs, and other financial advisors identify overlooked risks in existing life insurance policies before they become costly surprises.
*Client name has been changed to protect confidentiality.
*This example is provided for illustrative purposes only and is not intended to represent the experience of all clients. Individual results will vary, and past outcomes are not indicative of future results.