The TOLI Handbook – Chapter 15: Understanding Life Expectancy Reports

Updated 11/20/19 Originally posted 8/15/19 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 [...]

TOLI Trustee Alert: More of Your Clients Will Be Living to 100 and That Could Be a Problem

A little over five years ago we wrote about a little-known problem for trust-owned life insurance (TOLI) trustees - clients living to age 100 - the maturity age for many older life insurance policies. The problem is that many policies in their portfolio will not pay out a full death benefit at maturity and the chances of insureds living to maturity are increasing. According to [...]

2019-03-20T15:24:39-05:00February 5th, 2019|Uncategorized|0 Comments

Allstate Sued by Firm Alleging Non-Payment of Death Benefits

In 2013, we wrote about the sale of Lincoln Benefit Life, an Allstate company, to Resolution Life Holdings, Inc. It was the first purchase in the States for the UK company, run by British entrepreneur, Clive Chowdry, whose ambition, according to the Financial Times, was to “buy up and roll together a number of life assurance businesses and to run them for cash instead of [...]

2018-12-03T11:55:08-06:00December 3rd, 2018|General Interest, Life Settlements, Uncategorized|3 Comments

Trustee Alert: Don’t Be a Casualty of the Life Insurance Illustration War

In the 1980s when current assumption universal life (CAUL) hit the market, sales illustrations were created showing cash value returns of 10% and more every year – for a product that was invested in fixed instruments.  When equity markets soared and variable universal life (VUL) became the rage, many sales illustrations projected 12% returns – again, every year. Life insurance illustrations are at best a [...]

Newspaper Headlines Highlight Changes in Life Insurance (and TOLI) Business

On October 30th 2018, Voya Financial, a company we wrote about because of a lawsuit filed against it for cost of insurance increases that occurred on universal life policies sold in the past under the Security Life of Denver banner, announced in its third-quarter earnings call it would be ceasing all life insurance sales as of the end of the year. The company, which was [...]

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 [...]

Saskatchewan Government Squashes Investors Hope For Unlimited Returns Using Life Insurance

On October 29th the government of the Canadian province of Saskatchewan amended regulations dealing with premium deposits into a specially designed universal life policy.  The new rule limits deposits into “side accounts in life insurance policies to an amount equal to premiums required under contract.” (1) The new regulation comes as a court battle rages between Canadian life insurance carriers and investors who purchased the [...]

TOLI Trustee Alert: The Taxation of a Life Settlement Policy Sale

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, [...]

2019-09-27T15:22:53-05:00October 26th, 2018|Uncategorized|2 Comments

TOLI Trustee Alert: Life Settlements – How to Sell a Policy

In our last blog, we tackled the question of when to sell a life insurance policy.  With the 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, and the TOLI trustee must become aware of the sales process, so we wanted to provide a short primer for [...]

2018-10-19T09:17:13-05:00October 19th, 2018|Uncategorized|0 Comments

Transamerica Settles Cost of Insurance Increase Litigation

In 2015 we reported on a Transamerica cost of insurance (COI) increase on a block of universal life policies and illustrated the 40% increase in COI on one policy affected raised the annual carrying costs to maturity for that policy from $36,400 to $81,595.  That cost increase led to three separate class action lawsuits that were consolidated into one claim in November of 2016. Preliminary [...]