At ITM TwentyFirst, it is our goal to keep our clients informed of industry wide news that may affect how life insurance assets are managed. This week we became aware of cost of insurance (COI) rate increases for blocks of policies for Minnesota Life Insurance Company. The increases will affect all policies that have the word “adjustable” in the product name including Variable Adjustable [...]
Updated 2/5/2020, Originally posted 11/29/18 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 [...]
Updated 1/29/2020, originally posted 10/26/18 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 [...]
Updated 1/22/2020 Originally posted 10/19/2018 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 [...]
Updated 1/16/2020, originally posted 10/12/2018 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 [...]
Updated 1/7/2020, Originally posted 10/05/2018 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 [...]
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. [...]
Updated 10/29/19 Originally posted 6/4/18 Four years ago, it was reported that the average age of a financial advisor in America was 51, with 43% over the age of 55 and many heading towards retirement (1). One year later, an industry publication noted that the average age of a US life insurance agent was even higher — 59 (2). Many veteran life insurance agents have [...]
