Our clients are corporate and personal trustees and estate planning professional advisors who lack the fiduciary law, regulatory compliance, and life insurance expertise necessary to make informed TOLI product suitability determinations and monitor performance.

The creation of an insurance trust generally results from an economic analysis prepared by a grantor’s legal and/or tax advisor.  Upon trust acceptance, policy management and performance risks are then contractually assumed by the trustee whose basic fiduciary duty is to maximize the probability of a favorable outcome to the trust estate.  Life insurance is ideally suited for trust ownership because a trustee has the option to either transfer policy performance risk to the underwriting carrier by accepting a guaranteed death benefit policy or retain and actively manage this risk by accepting a non-guaranteed death benefit policy.  If the trustee accepts a non-guaranteed policy but lacks the expertise to actively manage policy performance risk, the trustee has a fiduciary duty to obtain risk management support from a qualified third-party so that defensible product suitability determinations can be annually documented and communicated to trust beneficiaries.  Since the grantor’s professional advisors usually monitor trust operation functions, an annual check-and-balance process between these advisors and the trustee is implicit in safeguarding the interests of all insurance trust parties.

TOLI risk management should be differentiated from custodial care administration.  TOLI is generally described as a low risk investment but it does require attentive annual monitoring to identify changes in trust objectives and adverse policy performance, especially if the trustee accepted an indeterminate “flexible” premium non-guaranteed death benefit policy.  A trustee must demonstrate defensible product suitability decisions based on credible policy performance reporting.  Fiduciary conduct is measured against a process standard, not a performance standard.  As a result, a TOLI fiduciary must demonstrate a prudent risk identification and mitigation process to avoid breach of trust allegations.

Trust-Owned life insurance can be managed with the same standard of care discipline expected of fixed income and equity investments.  Our services are designed to safeguard the interests of all insurance trust parties – trustees, grantors, beneficiaries, professional advisors, and insurance agents/brokers.  Our services are strictly fee-based.  By contract, The TOLI Center cannot serve as a policy provider, cannot receive insurance policy commissions in consideration of its services, and does not provide insurance policy remediation advice or restructure recommendations.

Please visit the TTC Library for topical TOLI presentations, professional advisor articles and State Insurance Department Opinions.