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 [...]
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 [...]
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 [...]
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 [...]
The answer is an emphatic NO. Some permanent life insurance policies, specifically guaranteed universal life (GUL) and Whole Life (WL), have required premiums, though WL out of pocket premiums can be reduced by dividends, paid-up addition cash values or policy loans. But the premium paid is not the actual cost of the policy and finding the underlying costs on the policies is a challenge. For [...]
What steps should you take if a grantor says they want to surrender their policy? In the decade-plus that we have been managing life insurance for TOLI trustees, we have noticed that the weak link in their services usually is remediation. The inability to analyze policy options in changing situations is an area of future liability. Some trustees we have spoken with have surrendered policies [...]
Over the years, we at ITM TwentyFirst have been leaders in peer education. The TOLI Handbook, a free download available here as a PDF, provides industry peers with a single source guide for managing trust-owned life insurance (TOLI) trusts and policies. We have, over the years, provided hundreds of hours of professional CE for several professional designations. Our staff is encouraged and incentivized to seek [...]
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 [...]
Guaranteed universal life takes the market risk out of life insurance, but it adds additional risks that sit squarely with the TOLI trustee. For all GUL policies you take in, you should understand all of the policy nuances
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 [...]
