Opulen Capital Life Settlement: Trust-owned Life Insurance: Is Yours Relevant?

If you own a trust-owned life insurance policy, or TOLI, are your beneficiaries getting the full value possible from that policy? The difference between your TOLI and your traditional life insurance policy is this – someone, usually a professional management firm, is maintaining your policy and its valuation.

However, many financial investment management companies are reluctant or unwilling to re-examine the life insurance policy. Perhaps it’s the assumption that the policy is a stagnant investment with a set payout and no variation in ROI. True that life insurance policies are by and large risk-averse investment vehicles that neatly transfer risk to a secure investment strategy. But how many investment or trust managers are delving into a true examination of the life insurance policy itself?

The answer: not many. Most trust managers pay the premiums, send out the necessary notices, and give not a second look to the performance of the life insurance policy. In fact, studies suggest that trustees are being sued more often for overlooking or failing to properly manage the life insurance policy. With variable life policies holding a number of sub-accounts that must be properly managed in order to maintain a maximum earning potential, some experts question whether trust managers are equipped to handle such maintenance alone. Experts warn that improper handling of the life insurance portion of a trust could be devastating to the underlying trust for several reasons.

Trust managers need to examine if your life insurance policy is underperforming. For universal or variable life insurance policies, fluctuations in the economy and the current recession could spell ROI disaster. A projected 10-12 percent assumed gross rate could easily dip into single digits these days, causing a drop that has a big impact on the portfolio over time.

Also, life needs change, as do lifestyles and income brackets. What may have been a suitable policy five years ago may now be obsolete or grossly underestimating the policy holder’s future needs. Or perhaps the life insurance policy owner now needs less death benefit coverage. Trust managers should routinely examine the amount of coverage to the client’s particular situation.

Add to that changes in the products now offered. What may not have been possible at a lower price ten years ago may be standard coverage today. And riders may now cover what wasn’t possible when the original policy was written.

Then there’s the matter of premiums. Is the current life insurance policy about to experience a premium hike? If so, is the amount paid conducive to the overall expenses of the existing trust fund portfolio? Fund managers should work with life insurance brokers to understand the financial impact on the policy holder. Brokers can also address alternatives to the coverage, including the life settlements market. Fund managers can get a comprehensive picture of the client’s earning potential through the life settlements market as opposed to the current, traditional policy expenses and payout.

If you’re a trust manager, contact a life settlement broker for a detailed examination of your client’s life insurance policy and alternative investment opportunities. In a tight recessionary market, transferring the premiums and the administrative responsibility of the life policy to a life settlements market could save your clients thousands annually.

Opulen Capital’s mission is to continue to provide the best solutions for our clients through the highest level of integrity and service. The strength of our business is our commitment to improve our client’s financial net worth. For more information on whether your policy qualifies for a life settlement arrangement, contact us at 877-678-5361 or visit http://www.OpulenCapital.com.