TOLI Trustee Alert: Oops, the Policy Lapsed…Now What?

The most common fear for a life insurance trustee is that somehow the ball is dropped and the policy in their care lapses. After all, a trust-owned life insurance (TOLI) trustee, even if they are not sophisticated in all the nuances of life insurance policy management, should at least be able to keep the policy in force. But unintended lapses do happen, and when they [...]

Take the TOLI Challenge: Only Permanent Life Insurance Policies Can Be Sold, True or False?

Earlier this year 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 [...]

Trustee Alert: Managing Guaranteed Universal Life Policies

Universal life policies came into the market offering premium flexibility and transparency that was unknown in whole life policies. However, universal life policies lacked one thing those whole life policies had - death benefit guarantees. If you paid your premium on a whole life policy, the policy death benefit was guaranteed to be paid. The earliest universal life policies (current assumption) were fixed investment products [...]

Prudently Managing ILITs – It Is More Than Just Tracking a Policy

When we first ventured into the trust-owned life insurance (TOLI) servicing business, our lead product was a policy tracking and trust administration system - what is known today as InsuranceIQ, and it was light years ahead of anything TOLI trustees had at their disposal. At the time, most trustees simply got an in-force ledger every couple of years, along with a rating update for the [...]

Take the TOLI Challenge: Can you answer this?

What is most important when determining the liability of a trustee’s actions? Over the years, we have noticed that the knowledge of TOLI trustees varies from trust company to trust company. After publishing the TOLI Handbook in 2018, we thought we would “chunk it down” in 2019 with the TOLI Challenge—a series of questions designed to test the knowledge of the typical TOLI trustee. We [...]

The Big Four Carriers Announce Their Dividends for 2019

  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 [...]

Best Interest Standards for Life Insurance Would Be a TOLI Trustee’s Best Friend

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.

Informing Grantors About Their Policy Makes Good Business Sense

A recent 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. Maybe the other 67% probably think they know how it does, but I imagine they could get a refresher lesson on how it actually does. Even if they do understand how it works, do [...]

2018-12-11T08:05:44-05:00December 11th, 2018|General Interest, Policy Management|0 Comments

Life Insurance Settlement Association (LISA) Challenges Lincoln Enhanced Buyback Offer

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 [...]

The TOLI Handbook – Chapter 15: Understanding Life Expectancy Reports

In our last blog, we 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 [...]

The TOLI Handbook – Chapter 16: Remediation, the Weak Link for Trustees

A TOLI trustee we work with received a request from a grantor tired of gifting to pay premium 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 [...]

TOLI Trustee Work Load and Liability Climbing as Use of ILITs Diminish

As the federal estate tax laws changed in the last year, 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. For [...]

The TOLI Handbook – Chapter 10: Understanding Equity Index Universal Life

Equity index universal life (EIUL) is the hottest product in the permanent life insurance marketplace. The “star of the life insurance show” according to one published report (1) that is touted as providing the upside of the equities market without the risk of loss. The carriers accomplish this by crediting the EIUL policy with the positive returns of an index (often the S&P 500 – [...]

ITM TwentyFirst Alert: Lawsuit Filed Against John Hancock for COI Increase

In February of 2017 we reported John Hancock had placed restrictions on certain inforce illustrations. At that time, we mentioned this was a possible precursor to a cost of insurance increase.  A year later the carrier notified the New York Department of Financial Services that it would be raising the cost of insurance (COI) on some Performance UL policies. Last month we reported the first [...]

The Life Insurance Trust Company Solves Major Problems for Veteran Life Insurance Agents and Advisors

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 worked for years building a [...]