A little over five years ago we wrote about a little-known problem for trust-owned life insurance (TOLI) trustees - clients living to age 100 - the maturity age for many older life insurance policies. The problem is that many policies in their portfolio will not pay out a full death benefit at maturity and the chances of insureds living to maturity are increasing. According to [...]
Near the end of last year we posted a blog reporting the 2019 dividend payouts for the big four mutual companies, all whose primary product line is whole life insurance. Dividends are a return of premium when carrier results exceed a very conservative projection for investments, income, and expenses. Dividends are paid annually on participating whole life insurance and determined at the discretion of [...]
The first thing you notice after entering the Orlando World Center Marriott Resort and Convention Center is the lineup of vendor booths set up in the hallway – the overflow from the cavernous convention center hall. This year’s Heckerling Institute on Estate Planning appears to have been a great success. The number of attorneys attending was up, and those putting on the session attracted more [...]
A bill introduced in Congress could help spur sales of life insurance in the secondary market by allowing policyholders to use the proceeds from the sale of a life insurance policy to fund an account to be used for paying long-term care expenses on a tax-favored basis. HR Bill 7203, introduced by U.S. Rep. Kenny Marchant of Texas, a Republican, and U.S. Rep. Brian Higgins [...]
We have three office locations across the United States, and as I write this, none will see 40 degrees as their high-temperature today, so it is no wonder we are looking forward to heading south to the sunshine of Orlando, Florida, for this year's Heckerling Institute of Estate Planning session from January 14-18. However, it is much more than that. It has been about 15 [...]
First, we want to thank all ITM TwentyFirst clients for another remarkable year of growth. Without the support of our partners at banks, trust companies, family offices, and law firms across the country, we could not sustain the growth that has made us the largest manager of in-force life insurance in the country. So, thank you for that. One reason for our growth over the [...]
For the last few years, we have tracked the dividends paid by four large mutual carriers whose main product offering is whole life. These carriers are owned by their policyholders, not stockholders and operate with a long-term business view. Unlike most life insurance carriers, they sell their products through a career agency system – a dying breed. Their dividend rate and payments are a [...]
As a TOLI trustee, you have a fiduciary responsibility to ensure that every transaction - either a new policy sale or replacement is not only suitable for your client, but also in your client’s best interest.
In the 1980s when current assumption universal life (CAUL) hit the market, sales illustrations were created showing cash value returns of 10% and more every year – for a product that was invested in fixed instruments. When equity markets soared and variable universal life (VUL) became the rage, many sales illustrations projected 12% returns – again, every year. Life insurance illustrations are at best a [...]
On October 30th, Voya Financial, a company we wrote about because of a lawsuit filed against it for cost of insurance increases that occurred on universal life policies sold in the past under the Security Life of Denver banner, announced in its third-quarter earnings call it would be ceasing all life insurance sales as of the end of the year. The company, which was spun [...]
Back in the spring, we reported on the Lincoln National “Enhanced Cash Surrender Value” offer the carrier began making to a select group of policyholders. These unsolicited offers would allow policyholders to receive an amount higher than the current cash surrender value to return their policies to the carrier. As we noted, the offers were similar to some made on mispriced variable annuities after the [...]
On October 29th the government of the Canadian province of Saskatchewan amended regulations dealing with premium deposits into a specially designed universal life policy. The new rule limits deposits into “side accounts in life insurance policies to an amount equal to premiums required under contract.” (1) The new regulation comes as a court battle rages between Canadian life insurance carriers and investors who purchased the [...]
TOLI Trustee Alert: The Taxation of a Life Settlement Policy Sale In our last two blogs, we discussed when and how to sell a life insurance policy. In this blog entry, we want to talk about the taxation of a life insurance policy sale for the seller. The death benefit of a life insurance held in trust is received free of both estate and income [...]
In our last blog, we tackled the question of when to sell a life insurance policy. With the changes in the estate tax laws and the aging of the population in the typical TOLI portfolio, life settlements will become more prominent in the coming years, and the TOLI trustee must become aware of the sales process, so we wanted to provide a short primer for [...]
A class-action lawsuit against Security Life of Denver, initially filed in July of 2018, is moving ahead in Colorado. The lawsuit alleges policyholders have paid “unlawful and excessive” cost of insurance charges on Strategic Accumulator Universal Life and Life Design Guarantee Universal Life policies subject to increases announced in September of 2015. The suit contends that there is “no possible justification” for the increase since [...]
