Trust-Owned Life Insurance (TOLI) Risk Management Tools

Trust-Owned Life Insurance (TOLI) is a powerful estate planning tool used by high-net-worth individuals to transfer wealth efficiently.

But with great financial power comes great fiduciary responsibility—especially for trustees overseeing these life insurance policies.

This article explores how risk management platforms can help trustees minimize liability and ensure policy sustainability.

📌 Table of Contents

• What Is Trust-Owned Life Insurance (TOLI)?
• Why Risk Management in TOLI Matters
• Key Tools for TOLI Oversight
• Fiduciary Duties of Trustees Managing TOLI
• Top TOLI Monitoring Platforms

What Is Trust-Owned Life Insurance (TOLI)?

TOLI refers to life insurance policies owned by irrevocable trusts.

These trusts are typically used to exclude death benefits from the insured’s taxable estate and to control how proceeds are distributed.

The trust is the policy owner and beneficiary, while the insured is often the grantor.

Why Risk Management in TOLI Matters

Without regular monitoring, TOLI policies can lapse or underperform—undermining the estate plan entirely.

Premiums may rise, interest crediting may fall, and cash values may erode silently.

This can lead to lawsuits against trustees for breaching fiduciary duties, especially if beneficiaries suffer losses.

Key Tools for TOLI Oversight

🛠️ Policy Performance Reports: Track policy health against original illustrations.

🛠️ Benchmarking Engines: Compare policy costs and crediting rates to market standards.

🛠️ Premium Adequacy Tools: Predict whether planned premiums will sustain the policy.

🛠️ Stress Testing Models: Analyze policy under varying interest or mortality scenarios.

Fiduciary Duties of Trustees Managing TOLI

ERISA and UPIA guidelines increasingly apply to life insurance in trusts.

Trustees are expected to monitor, document, and act prudently—similar to investment fiduciaries.

Failing to review policies annually or ignoring deterioration can trigger liability.

Top TOLI Monitoring Platforms

Several modern solutions help automate fiduciary oversight:

✔️ Veralytic: Offers policy performance audits and benchmarking tools.

✔️ ITM TwentyFirst: Provides full-service monitoring, reporting, and trust recordkeeping.

✔️ Proformex: Delivers risk alerts and performance dashboards to financial institutions and fiduciaries.

Further Resources on Trust and Policy Governance

Keywords: TOLI risk management, life insurance trust tools, trustee fiduciary duty, policy monitoring platforms, estate planning compliance