Prevent Lapsed Trust-Owned Life Insurance (TOLI) Policies

The best way to prevent lapsed TOLI policies is to conduct an annual audit and review of the TOLI policies. There are a lot of factors affecting the TOLI policy that can change in a year's time. For example, the rating of the insurance carrier can change. With the upheaval in financial markets, life insurance companies can have their financial ratings change with their exposure to certain financial instruments. The change in financial markets can have an adverse impact on the interest rate the carrier credits to the policy.

In addition, the status of the grantors can change. We have seen all too often situations where one grantor has died, and that was not reported to the trustee for appropriate action. The health of grantors can change and make decisions on life insurance options difficult, if not impossible.