We hear it all the time from ILIT Trustees and Grantors - that a life insurance policy taken out years ago for estate planning purposes is no longer needed. The original reason for the policy is no longer applicable and now the Grantor wants to cease paying premiums (and trust fees). Your client is comfortable with surrendering the policy back to the insurance company [...]
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 [...]
Previously, we started the TOLI Challenge with the question: What is most important when determining the liability of a trustee’s actions? Click here for that answer. Today, we have a follow up true or false question. Only permanent life insurance policies can be sold in the life settlement market, True or False? It may surprise you that the answer is false – some term [...]
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 [...]
Executive Summary: Historically, mortality rates trend downward during the summer months, but in the summer of 2020 mortality was on the rise for life settlements. In total from April through September, we observed at-most a very small protection from COVID-19 on the life settlements population. COVID vaccines will likely reduce excess mortality in life settlements significantly by Spring 2021. Insureds in nursing homes and [...]
Life settlements are confusing, at best. That confusion can make you uncomfortable. So much so that you allow a client to surrender or lapse a policy without exploring the option. That would be a mistake – one that could cost the client money and put you in hot water. It’s hard to move ahead if you do not know how. We understand that, just [...]
In this post we estimate an “equal-risk” projection of COVID-19 mortality within life settlements using the geographic overlap of COVID-19 deaths with life settlement insureds. By comparing this equal-risk rate to observed data, we estimate a net mortality risk factor of 6-12x for the life settlements population. This is on par with a simple age-weighted projection of mortality and suggests socio-economic advantages may have [...]
