Your clients, with advice from their attorney, have determined that a life insurance policy owned by an Irrevocable Life Insurance Trust (ILIT) is the best solution to meet their estate liquidity needs. They contact you to obtain the coverage for them. The clients have ask you to obtain the coverage prior to having the trust executed, as they wish to minimize their attorney fees until they are sure they can get the coverage at an acceptable cost. This has the potential to create a serious problem, however. What do you do if the life insurance application you submit is ready for issue by the carrier before the attorney has completed the ILIT?

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The opportunities for cases to run into problems during the underwriting process are many when it is not grounded on sound financial underwriting information. Before beginning the underwriting process, it is critical to have complete data regarding how the amount of insurance was determined, and to communicate this information to BUI so that it can be shared with the carrier’s underwriter. To assist brokers in getting a grip on this issue, Bob Halsted (BUI’s in house underwriter) is pleased to offer the following generic guidelines.

Of course, you can always email or call Bob to discuss your case. But this document may offer you an idea of what to expect. Please note that these guidelines are not carrier specific, but are generic and should apply to nearly all carriers.

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Additional Helpful Underwriting Documents:

Brokers have found two other documents provided by BUI to be especially helpful in preparing clients for the underwriting process. These documents are offered without logos or letterhead so that they are generic for use with your client. You can even place them on your own letterhead if you wish. Click on the following links to download these useful documents. They are also posted in the Underwriting section of the BUI website.

Preparing For Your Exam

Understanding The Underwriting Process

You probably are still hearing about the Anti-Money Laundering (AML) requirement for insurance agents and brokers. But just because you may have satisfied the requirement in the past, does not mean you can ignore the reminders.

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Buy-Sell Agreements and Divorce

As you know, a buy-sell agreement is a vitally important business document that serves almost like a “will” for the business. Without a buy-sell agreement, the future success of a business is subject to extreme risk. All parties involved in a business – owners, employees, customers, vendors – can be hurt if the business is unable to continue.

All buy-sell agreements contain what are commonly referred to as “trigger events”. A ”trigger event” is an event that causes the agreement to be implemented and the buy-out provision to be exercised? Most commonly, the events that are designated as “trigger events” are death and retirement. Sometimes disability is also included in the agreement. But there is one event that can cause extreme disruption to the business that is almost never considered…. divorce!

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