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Insurance Portfolio Overlay Management June 21, 2024
Insurance Portfolio Overlay Management
Israel M. Lustig, CLU CFP
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Insurance Portfolio Overlay Management

Who We Are

Our flagship product is an overlay insurance portfolio management system designed specifically for administrators of insurance trusts that are comprised of multiple insurance policies or any trust that contains insurance holdings, that are mandated to be managed using a "total portfolio approach" (on a portfolio level) not a "silo approach" (on an asset level).

What We Do

We help trust administrators manage multiple-policy life insurance portfolios on a portfolio level to enhance compliance with applicable regulations and to:  

  • Maximize efficiencies
  • Improve performance
  • Increase sustainability
  • Reduce costs and risk beyond that those available to disparate policies

How We Do It:

We integrate the life insurance policies together managing them as one cohesive portfolio using a centralized resource allocation and utilization function. We then apply as many financial/investment theories and methodologies as are adaptable to insurance.

We organically leverage the policy heterogeneity (i.e., dissimilarities or disparities) using a process comprised of the following elements:

Internal Sourcing: sourcing portfolio-wide benefits from the least-cost policy. For example, sourcing mortality (net at risk: death benefit minus cash value) from the existing lowest-cost carrier, thereby delivering the same amount of mortality coverage in the aggregate but paying less for it.

Strategic Locationing, Leveraging and Portfolio Tilting: to provide higher investment productivity, putting premiums and cash values to their highest and best uses by a) strategically allocating new incoming premiums and/or b) migrating cash values to other policies or to side-fund trust accounts outside a policy. These efforts create the maximum death benefits for beneficiaries or cost reduction to policy holders.

Rank Ordering: when withdrawing from, migrating into or terminating/settling a specific policy, executing in the most efficient order when rebalancing, truing-up, shoring-up, stepping-down, substituting or life-settling coverages.

Efficiency: not wasting any policy value, quality, or capability (For example, creating a synthetic cash value death benefit if currently employing a level death benefit.)

Maximizing Full Capacity: using the coverages to their maximum capacity when most advantageous cross-household, such as: suspend vanishing the premium, restart paying full premium to get maximum PUA death benefit. in other words, extracting maximum utility from coverages by accessing cash values and repurposing death benefits for previously unanticipated needs or goals.

Capitalizing on all Rights, Features, Riders and Options: taking advantage of all contract elements when "in the money." (For example, forcing death benefit increases even when uninsurable.)

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