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

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 [...]

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

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 [...]

Carrier Offers Life Policy Buyback – Another Trustee Decision Dilemma

A couple of years ago, Lincoln National was offering some policy holders the opportunity to receive an “Enhanced Cash Surrender Value” if they surrendered their life insurance policies within a specific time frame.  A few weeks before this was widely known, we began to receive letters from the carrier, along with a Frequently Asked Questions (FAQ) brochure explaining the offer.The offer is not unlike offers [...]

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 - later called 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 carrier, placed it [...]

3 Trends in Corporate ILIT Administration That You Should Be Aware Of

There are three continuing trends with respect to TOLI management in the corporate fiduciary space.  If you find yourself managing or overseeing TOLI at a bank or trust company, I’m sure you are seeing some of this play out in your own department. TREND #1 Overdependence on Support Software If used correctly, ILIT support software is great for minimizing potential administrative miscues.  Many of [...]

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?

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 [...]

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, we thought we would “chunk it down” with the TOLI Challenge—a series of questions designed to test the knowledge of the typical TOLI trustee. We will be publishing questions [...]

Ever Heard of a Life Insurance Carrier Giving $200,000+ in Premium Back? No? Now You Have

In the almost 15 years we have been managing life insurance policies, we have never encountered a situation where a life insurance carrier volunteered to give back money.  Oh, sure, you can surrender a policy and get money back, or take a loan or withdrawal on your policy to get some cash, but at a cost. Recently we received a letter from a carrier [...]

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