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Conversations and Handouts from Heckerling

Friday, January 24, 2014

Thank you to everyone who stopped by the Veralytic suite at this year’s 48th Annual Heckerling Conference.  In addition to finding information about Hard-to-Value assets from our friends and partners Insurance Trust Monitor(ITM) and PDS, there were three main conversions stirring amongst our guests in our suite:

  1. Which sessions is everyone talking about or going to? In suite F, attendees were talking about the UPIA and TOLI session about the Uniform Prudent Investor Act (UPIA) requires all trustees to manage, monitor and evaluate trust assets and investments for the benefit of the beneficiaries of the trust. However, despite numerous professional articles pointing out the applicability of UPIA to trust-owned life insurance (TOLI), the vast majority of trustees of irrevocable life insurance trusts (ILITs) either are unaware of or continue to ignore this duty with respect to TOLI. Thanks to the all panelists for their leadership in this topic and a special thanks to Dick Schwartz for including Veralytic in his presentation about useful industry benchmarks. Click here for the UPIA & TOLI handout made by Veralytic.
  2. Are there new rules or regulations that attendees need to know about? The Office of the Comptroller of the Currency guidance while silent on the process steps by which bank fiduciaries should evaluate replacements, it cautions bank fiduciaries that “policy illustration[s are] subject to a high degree of fluctuation” and thus not reliable for determining whether a replacement should be considered. This caution against comparing illustrations is also consistent with guidance from other financial and insurance industry authorities and established case law. Instead, evaluating replacements should to conform to generally-accepted risk management principles, to include, but not necessarily limited to: A) “only incur[ring] costs that are appropriate and reasonable in relation to the assets [and] the purposes of the trust” [UPIA Section 7] and B) “consider[ing] … the expected total return [from the] overall investment strategy having risk and return objectives reasonably suited to the trust” [UPIA Section 2(c)(5)]. Email to ask for the OCC Booklet.
  3. What are other attendees doing to be successful? CPAs, tax attorneys, and particularly trustees struggle because they lacked standards for the prudent selection and proper management of life insurance as an asset like they have and follow for most every other type of asset in their care. While the above OCC is silent on process, the best practice standards are all about a rigorous process needed for insurance planning, similar to what is already being used in the investment business.   Click Here for the Best Practice Standards Handout.

Whether you are a trustee of an ILIT, a compliance officer of an OCC bank, a CPA or tax attorney doing estate planning for a client, or a life insurance advisor helping some of the above ensure client's best interests are being served, the common thread in all 3 Heckerling conversations was the emergence that avoid relying solely on hypothetical illustrations and embrace proven and long/well establish Prudent Investor principles using research that  independently measures policy charges and performance and provides documentation that the inforce policy and/or product being recommended is competitive and suitable relative to the universe of peer-group product alternatives. Having this documentation can help protect you against a potential UPIA lawsuit or challenge. 

In addition, comparing illustrations of HYPOTHETICAL policy performance to compete, can be "misleading" and is "strictly prohibited" by the chief regulatory body of the financial services industry, and are "fundamentally inappropriate" according to a study by the chief actuarial body of the life insurance industry, and "are subject to a high degree of fluctuation" and thus not reliable for determining the suitability of a given policy according to the U.S. Office of the Comptroller of the Currency.

To know whether or not your policy review provider is compliant with both industry regulations and/or established case law, be sure to know the 3 Questions to ask about EVERY policy review. Visit to learn more about the only independent, patented rules-based research report of life insurance policies that is compliant with both industry regulations and established case law.

Veralytic goes beyond simply comparing illustrations of hypothetical policy values that can be considered “misleading” and “inappropriate” by both financial and insurance industry authorities. The Veralytic Research consists of several measures of policy suitability in an easy-to-read graphical overview, summarized by a simple star rating system that measures against five different categories of policy performance. The validity and utility of the research has been recognized by national industry publications as well as regulatory and oversight agencies.

Veralytic is simply the fastest, easiest, and most comprehensive and cost-effective way to independently verify to clients and their advisors whether or not the pricing and performance of existing or proposed life insurance is in their best interest. Veralytic is accepted for independent client representation, endorsed by the New York Bankers Association (NYBA) and compliant with industry regulations and established case law.

Use the Veralytic Reports to determine the appropriateness of pricing, the reasonableness of performance expectations for invested assets underlying policy cash values, and overall suitability for your (client’s) policies based on the 5 factors of suitability. Click here and get up to 3 Veralytic research reports under our NO-Risk trial subscription.

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