Updated 11/20/19 Originally posted 8/15/19 We recently wrote about remediation and the challenges that TOLI trustees have when managing a policy. Remediation is not just developing the best options for an under performing policy, increasingly it means maximizing the value of a policy that a grantor believes is no longer needed, or one whose expected funding has stopped. These decisions must be well-thought-out and every [...]
Updated 11/13/19 Originally posted 8/8/18 A TOLI trustee we work with received a request from a grantor tired of gifting to pay premiums on his portfolio of whole life policies. His agent suggested that the three policies be replaced with one policy with a reduced death benefit. The existing portfolio totaled $5.7 million of coverage. The agent proposed transferring the $2.1 million of cash value [...]
Updated 11/6/19 Originally posted 8/1/18 As the federal estate tax laws changed, the use of new irrevocable life insurance trusts (ILITs) diminished, but the work required to administer existing ILITs went up along with the potential liability attached to the asset class. There are several reasons for this. As a country, we are aging and the population of the average TOLI portfolio is aging too. [...]
This week our New York City office received letters alerting us of a cost of insurance (COI) increase for Genworth Life and Annuity Insurance Company “Genworth”. Over the last year, Genworth has only produced illustrations based on guaranteed rates and guaranteed cost of insurance rates for certain products, citing insurance regulations. This follows a similar pattern of other carriers including John Hancock Life Insurance [...]
In the last two posts, we explained the popularity of the equity index universal life policy, as well as the mechanics of the policy. While the policy is tied to an equity index, it is a fixed product, with the bulk of the premium going into the carrier’s general account to satisfy the floor and the balance – a much smaller amount – going [...]
In the first posting in this series on the equity index universal life (EIUL) policy, we talked about the popularity of the policy and the general characteristics of the policy. In this post, we will outline the mechanics of the policy. As we mentioned in the first post, the policy cash value is tied to an index, for example, the S&P 500. The gain [...]
A Three-Part Series for Trust-Owned Life Insurance (TOLI) Trustees As the back-office administrator of thousands of life insurance trusts for fiduciaries across the country, we deal with every type of policy. We have found the equity index universal life policy to be one of the most misunderstood policies in the TOLI space. This three-part series provides a thorough background in the policy, its mechanics, [...]
Life expectancy estimates are used by life insurance companies and other organizations in various ways. The Life Settlement market relies heavily on this type of data to ensure the health of their portfolios. Let’s take a look at how life expectancy estimates are created, and what they include. How Life Expectancy Estimates are Calculated Life Expectancy (LE) estimates take a number of factors into [...]
As we move into the second half of 2019, there are three continuing trends with respect to TOLI management in the corporate fiduciary space. If you find yourself managing or overseeing TOLI at a bank or trust company, I’m sure you are seeing some of this play out in your own department. TREND #1 Overdependence on Support Software If used correctly, ILIT support software [...]
Variable universal life (VUL) policies, whose sales took a nosedive after the 2007-09 market crash, have had a resurgence. Last year (2018) sales jumped, with annualized premiums from new VUL sales increasing by 14% over the prior year. (1) VUL policies provide the policy owner with the opportunity to invest in the equity market. The cash value in the policy is held in separate accounts [...]
