Call: 203-637-6655 or email – Kyle Shepard

January 15, 2019

January 15, 2019 Posted by: Category: Life Insurance No comments

Whether you believe the estate tax revisions of 2018 will be permanent or if they will vanish with the sunset clause, ILIT’s continue to have significant critical value in addressing asset transfer and legacy plans.

However, the ILIT is only as good as the life insurance policy that is funding the trust. Here are the top 10 reasons why life policies need to be audited now, to be certain they are still meeting the intended objective:

  1. Probably the most critical issue is that we have been in a long term, low interest rate environment that has significant impact on policy performance.
  2. To push down the cost of coverage,  many permanent policies were issued with term insurance, coupled with #1 above this is a double whammy negative on policy performance.
  3. Many trusts were funded with term insurance and are approaching the end of the term.
  4. Premium financing becomes more expensive with rising interest rates.
  5. A number of insurance companies have raised mortality costs on Universal Life contracts, potentially creating an underfunded contract.
  6. Confirm that all premiums have been paid.
  7. Policies are lapsing early, leaving the trust unfunded.
  8. Is the trust listed as the owner with a proper FEIN?
  9. Is the trust listed as the beneficiary?
  10. Based on current and/or future estate tax, is the policy death benefit appropriate?

Tax and legacy planning changes over time. The trust’s result from planning is only as good as the life policy supporting it. It is time to make sure it is rock solid.

If you have questions about a policy, drop me an email for some support. Contact me at 203-637-6655 or email sshepard@shepardinsgrp.com


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