By incorporating a "Life Insurance Policy Review," the estate planning advisor can now create opportunities for immediate cash savings or profits for clients in addition to the standard planning and "projected estate tax savings at death." Few clients get excited about spending time or money on estate planning. ![]() Why should advisors tell their clients about TOLI review?Īdvising your clients of a TOLI review will give immediate value during your interview. A TOLI review also examines options for reducing premiums or selling policies that the client may no longer need because of changed circumstances, increased exemptions, etc. What is a Trust Owned Life Insurance Review?Ī TOLI review is an objective review of the policies owned by a trust to ensure that those policies perform as the client intended. Misconception #7: If the client no longer needs the insurance coverage provided by a policy, the only option is to surrender it to the carrier for relatively little value.įact: A variety of alternatives, including improved life settlement opportunities, make it possible to gain substantially greater value than that provided by cash surrender to the carrier. Misconception #6: Policies purchased many years ago are cheaper than current policies because the insured is older.įact: Improved mortality rates as well as better underwriting and policy features created by industry competition often produce less expensive coverage on new policies (or increased coverage for the same premium). Any of these changing factors can cause the premium rates to change. Misconception #5: Premiums will remain level for the life of the policy regardless of economic conditions or interest rates.įact: Premiums are always a reflection of the insurance carrier's cost of providing coverage, current interest rates, and other economic conditions. Misconception #4: If one carrier has turned down the client for insurance, it is not possible to get adequate coverage from another carrier.įact: The competitive nature of the insurance industry means that it is often possible to secure appropriate coverage from a highly rated carrier even if another carrier has already rejected the client. Misconception #3: If the policy was in jeopardy, the carrier would notify the client in advance.įact: Carriers will not necessarily provide advance notice of policy problems to trustee owners of TOLI policies. Misconception #2: If the client pays premiums according to the schedule in the original insurance illustration, the policy will pay at death.įact: Even with regular payment of premiums projected from the original policy illustration, policies can fail if not monitored properly. Without regular review by an insurance expert, policies - especially older ones - can pose very significant risk or not achieve their original goals. Misconception #1: Unlike other assets, life insurance policies do not need management and regular review to avoid risk and optimize performance.įact: Policy performance can change dramatically over time. Seven Common Client Misconceptions - and Facts - about Life Insurance ![]() Industry studies reveal that TOLI portfolios rarely receive the required vigilant fiduciary oversight routinely associated with other assets held in trust, such as equities, real estate, etc. This issue of The Wealth Counselor explores many of the common misperceptions about trust owned life insurance - plus a process for you to add significant value for your clients by incorporating policy reviews of trust owned life insurance.Īlthough trust owned life insurance (TOLI) is a common planning vehicle for high net worth individuals and families, relatively few TOLI policies ever meet their initial projections.
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