Even if a trustee is not part of the sales process there still is a duty to ensure the policy is suitable and matching the right policy to the client is essential to limiting policy management issues (and liability) down the road.
There is a reason why I spend an entire chapter in The Wealth Advisors Guide to Life Insurance on selecting the best policy – for a particular client. For a TOLI trustee to accept a policy without understanding whether the policy fits for that specific client means they have already let the grantor down.
I have seen grantors struggle funding policies in full each and every year, when a flexible premium product may have made more sense. I have seen grantors shocked when a cost of insurance (COI) increase occurred when they could have had a policy with guaranteed costs.
Why does this occur? Usually, because a policy is sold without reviewing the client’s particular situation.
If you are a trustee or an advisor the client looks to, you can help make sure that the policy chosen is the right one – for that specific situation and client.
The four most important characteristics to review:
1. Premium flexibility
2. Death benefit guarantee
3. Cash value growth
4. Investment risk
In The Wealth Advisors Guide to Life Insurance we explore policy features, then, using that information, lay out a process so an advisor or trustee can help pick the “best” policy for that client by reviewing the characteristics listed above.
If you are a trustee, utilizing this process will help you manage the policy after the sale, limit liability and cement your relationship with your client by highlighting your knowledge of life insurance. If you are an advisor, showing your client how to make a prudent financial decision with a simple and easy process will lead to other business.
It’s a win/win.