Is an ILIT Right For Your Client’s Estate Plan?
Estate planning can be stressful and overwhelming so it is important to provide your clients with the most effective tools to achieve their goals. The Irrevocable Life Insurance Trust, or ILIT, is one of the most common estate planning techniques in use today. It removes the death benefit of a life insurance policy from the grantor's estate. By removing the asset from the estate, the benefit of the life insurance policy passes to the beneficiaries of the trust free of federal estate taxes. There are many reasons why an ILIT could be a great tool for your client. Here
Equity Index Universal Life – An Issue for TOLI Trustees?
The Equity Index Universal Life (EIUL) policy is a popular permanent life insurance product and is often seen as the star of the life insurance market. This type of policy offers the potential for stock market gains without the risk of loss. The insurance carrier often credits the policy with the positive return of an index (usually the S&P 500), subject to a cap, which is the maximum credited rate that is not guaranteed. At the same time, a floor is set at typically 0% to limit downside risk. However, the policy's cash value may still decrease. After the
3 Reasons to Outsource Your TOLI Trusts
Currently in the trust-owned life insurance (TOLI) world, we have sailed into a perfect storm of issues that make outsourcing your TOLI trusts more compelling than ever. There are plenty of articles on the varied reasons for outsourcing. And all, or at least the majority, of them are valid. Here are three stand-out reasons to outsource: The TOLI market is not growing, so why allocate resources? While life insurance trusts can serve many purposes, most trusts were set up to pay federal estate taxes. It was estimated that only two in every 1,000 estates would be affected by federal
TOLI Trustee Alert: More of Your Clients Will Be Living to 100 and That Could Be a Problem
A while 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 a Bloomberg article, “Over the past few decades, the average person’s lifespan has risen almost everywhere in the world,” and the wealthy “are counting on living even longer.” (1) In a survey referenced in the article, “53
Now Is a Good Time for TOLI Trustees to Talk to Their Clients
An online survey about life insurance found 33% of life insurance policy owners do not understand how their policy works. (1) The other 67% probably think they know how it does, but I imagine they would appreciate a refresher lesson on how it actually works. Even if they do understand how it works, do they understand how a decade of low interest rates and equity market volatility affected their policy? TOLI trustees should be reaching out to grantors to explain to them how their policy works. Doing so provides the grantor with greater clarity about their policy and gives