The Case for Active Management
Simply put, Trust Owned Life Insurance is an asset that requires active management. This is not a novel concept and clearly, there are innumerable aspects of our lives that we should be actively managing but don't; rain gutters, doctor's check-ups, oil-changes, home fire detectors, sump pumps, etc. There's virtually no limit to the number of life artifacts that require regular attention. Most don't receive it.
It is easy to ignore these things until they demand our attention. Similarly, we have a flow of potential clients who come to us after a life-threatening health event seeking coverage (a time when there is typically little we can do). That's why we ask our partners, colleagues and potential clients to think about their life insurance assets on a annual basis. We've put this methodology in place in our own practice, providing two key management services that we would recommend every trust owner and trustee follow.
The TOLI Group Process
Before you can manage anything you need to know what you are managing. Every trust has a purpose and the assets in the trust must serve that purpose. Part of The TOLI Group Process is identifying that purpose and describing how life insurance can help meet it. We work with the grantor and the trustee to create a Policy Management Statement which then allows us to suggest options which meet that purpose.
Annual Reviews
After the process comes the 'active' management. At The TOLI Group this means annual reviews. We will remember the annual date, check how the policy is performing, and determine if any issues with carrier stability have occurred. Every third year we will also automatically shop the policies and see if it is in the best interest of the trust to change coverage. We do all this so you can be assured that active management isn't being overlooked.
