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.
An online survey about life insurance found that 33% of life insurance policy owners do not understand how their policy works. (1) I suspect that this number is probably low. Perhaps the other 67% think they know how it works, but I imagine they could get a refresher lesson. Even if a policy owner does understand how it works, do they understand how a decade [...]
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 [...]
Executive Summary: The 3rd wave of the pandemic was the most widespread and deadly. Through 2020, we did not find evidence of protection on Life Settlement lives from COVID. However, in January 2021, at the peak of the 3rd wave, we saw the first signs that vaccines may be reducing excess mortality in Life Settlements. Many Life Settlement lives are in the highest [...]
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 taxes, however, if a TOLI life insurance policy is sold, [...]
In our last blog, we tackled the question of when to sell a life insurance policy. With past and potential future 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. The TOLI trustee must become aware of the sales process, so we wanted to provide a [...]
It is estimated that over 100 billion dollars in life insurance benefits are surrendered each year by older aged citizens in the US. (1) Unfortunately, the typical senior probably does not understand the life settlement market and the opportunity to maximize the value of an asset that many let lapse valueless after a lifetime of premium payments. Today’s TOLI trustee needs to be aware. With [...]
Because we have managed life insurance for over a decade our clients will sometimes inquire about the best permanent life insurance policy to buy. Our answer – always – is there is no single best policy. The market usually has a “latest and greatest” policy and today it is equity index universal life (EIUL) which captured 64 percent of all universal life premium in a [...]
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 data point that can be [...]
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 into a $3 million equity [...]
