Uncovering Sales Opportunities And Limiting Liability Exposures Through Trust Owned Policy Reviews

Uncovering Sales Opportunities And Limiting Liability Exposures Through Trust Owned Policy Reviews

While many advisors implement conservative, guaranteed solutions in trust owned policy arrangements, this is not a universal practice.

In a low interest rate environment, many policies that are held in trust may be under-performing and do not have the underlying guarantees to ensure that the policy does not lapse prematurely and that the primary objectives for the insurance planning are obtained.

Consider This Scenario

In a recent conversation with a carrier representative, they shared an instance in which the trust beneficiaries brought a law suit upon the writing agent, the broker general agent and also the carrier for failing to implement a sound insurance strategy and perform periodic reviews to avoid a premature lapse.

Fortunately, there had been a policy review conducted within the last 36 months in which the under-performance was identified and an alternative solution was recommended.

The insured (parents of the trust beneficiaries) elected not to pursue this recommendation and failed to inform their children that the review had taken place.  The courts held that this effort was enough to avoid adverse litigation and the case was dismissed.

Penetrate A New Market

This story can be a great conversation starter with any CPA’s, Estate Planning Attorney’s or Trust Companies.  You may even know a friend or family member who is serving as a trustee who could be exposed to this potential liability.

By offering a complimentary policy review of any trust held policies, you can strengthen your relationships with these professionals – which can lead to future referral opportunities.

There may even be a more cost effective policy solution available even if the current plan is not under-performing.

We can help streamline the policy review process and for more complex trust planning designs; we can leverage our Director of Advanced Markets, Tom Virkler.

Given that most policies held in trust are larger face amounts on older individuals, doing one of these reviews each month could result in a sizable increase in your income.

For assistance with a policy review, please contact your Life Sales Rep.