Not every life insurance policy held in a trust was built on guarantees. Many older policies have underperformed their original illustrations and could lapse before they do their job. Offering trust-owned policy reviews protects trustees and advisors, and it builds referral relationships.
Key takeaways
- Non-guaranteed policies held in trusts may underperform and lapse early if nobody is watching them.
- A documented policy review can be an important defense if beneficiaries later question how a policy was managed.
- Offering complimentary trust policy reviews is a strong way to start relationships with CPAs, estate attorneys and trust companies.
A documented review, even one the client chose not to act on, can make the difference when beneficiaries later ask what went wrong.
Why trust-owned policies need regular reviews
Many trust-owned policies were designed with non-guaranteed assumptions. After years of lower interest crediting and rising cost of insurance charges, some are now projected to lapse before the insured’s life expectancy. Because these policies usually carry large face amounts on older insureds, a lapse can mean a significant loss to the trust beneficiaries.
Trustees, often family members, may not realize they have a duty to monitor the policy. For more on this, see our post on older UL policies at risk of lapse.
A cautionary story
A carrier representative shared a case in which trust beneficiaries sued the writing agent, the brokerage general agency and the carrier for failing to maintain a sound insurance strategy and review the policy to prevent a premature lapse.
A review had been done within the prior three years. It identified the underperformance and recommended an alternative. The insureds, the beneficiaries’ parents, chose not to act and did not tell their children. The documented review was enough for the case to be dismissed. The lesson: review, recommend and document.
Use reviews to open doors with professionals
This story is a natural conversation starter with CPAs, estate planning attorneys and trust companies. Many have clients or friends serving as trustees who may not understand their exposure.
- Offer a complimentary review of trust-held policies.
- Share findings in plain language with the trustee and the client’s other advisors.
- Look for more efficient solutions even when a policy is performing, since newer products may offer better guarantees or lower cost.
How SRS helps
We can help you order in-force illustrations, analyze current performance, and compare alternatives. For complex trust designs, our advanced markets support can help you structure recommendations. Because trust-owned policies tend to be large, even one review a month can meaningfully grow your practice.
Frequently asked questions
Why do trust-owned life insurance policies need reviews?
Many were built on non-guaranteed assumptions that have not held up. Without periodic review, a policy can lapse before the insured dies, defeating the trust’s purpose.
Can a policy review reduce liability for an advisor or trustee?
Documenting a review and recommendation can be an important defense if beneficiaries later challenge how a policy was managed. It is not a guarantee, so consult legal counsel about specific duties.
What does a trust-owned policy review include?
Typically an in-force illustration at current and guaranteed assumptions, an assessment of lapse risk, and a comparison with alternatives such as funding changes or a replacement policy.
Reviewed by Tim Fuller on 2026-09-26
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
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