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. 1. As a country, we are aging and the population of the average TOLI portfolio is aging too. For example, 25% of [...]
Sally Wylie, a retiree living on an island in Maine, was stunned when her long-term care (LTC) policy premium almost doubled. According to the Wall Street Journal article that recounted her dilemma, the one-time learning specialist took on part-time work to help with the finances, and she and her husband cut back on expenses to afford the premium for the policy that was purchased to [...]
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 [...]
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 [...]
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 October of last year, we reported on a settlement in the case against Transamerica for a cost of insurance (COI) increase, which raised the carrying costs on a group of universal life policies by 200% or more. In one example, we reported the cost to maturity on one policy in our portfolio jumped from $36,400 to $81,595, after the policy got hit with a [...]
Twenty-one years ago, Charles Hunter Montgomery set up a life insurance trust naming his daughter, Kimberly, as trustee. He was guided on the purchase by his longtime advisors at a major wirehouse firm in his hometown, who also agreed “to administer the investment account to maintain that life insurance policy .” (1) The policy, a $2M survivorship life policy on Charles and his wife, was [...]
We have written as recently as November of last year about the issues trust-owned life insurance (TOLI) trustees encounter when dealing with policy illustration projections. If you are a fiduciary managing a policy, a sales or an in-force life insurance ledger may be one of the only tools you have to predict the outcome of a policy under your care. However, life insurance illustrations are [...]
Less than a year ago we reported that AM Best published a special report in which the rating firm issued a negative outlook on the US life insurance and annuity market. They cited the continuing low interest rates, a flattening yield curve, regulations, potential for market corrections and the need for innovation as the major reasons for the outlook. The report highlighted one potentially harmful [...]
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 [...]
