Firm Newsletter | Winter / Spring 2018 We are currently in an economic environment that is creating increasing concerns about life insurance policies. It may not be the “all weather,” “sleep at night” contract you had imagined. Life insurance is often a misunderstood and complicated asset. We would like to bring clarity and a call to action so that your beneficiaries are assured they will receive the benefits you intend. Many insureds are under the misperception that their life insurance policy will deliver at his/her death iron clad benefits to their beneficiaries. That may not be the case. Many life insurance policies are designed to stay in force only on the basis of critical (and often unrealistic) interest rate assumptions being met over the life of the policy. Based on the interest rate assumptions built into many policies, the insured is unaware that his/her policy may be headed toward failure. How does this happen? For many (not all) policies, the premium payment alone is insufficient to keep the policy in force. Once received by the insurance company, the premium needs to be invested at a projected rate of return such that the premium plus that return are sufficient to keep the policy in force. If the assumed earnings rate is not realized, the policy may require increased premiums or, worse, be stripped away by the carrier who will “foreclose” on the policy. This concern is magnified for second-to-die policies since those policies need to meet interest rate projections over two lifetimes in order to remain in force. In the current low-interest rate environment, policy lapses and/or significant premium increases are not uncommon. As a result, additional funding is often required to keep the policy in force, and, in other cases, policies are becoming prohibitively expensive and forfeited. There is a solution. Properly conducted, an “in-force policy review” or an actuarial analysis will identify those policies that are “damaged goods” and in danger of lapsing. Solutions to a failing policy can be explored Surprises with Life Insurance - Continued on Page 2 Surprises with Life Insurance By Dave F. Senger | 612-877-5262 | Dave.Senger@lawmoss.com “Many life insurance policies are designed to stay in force only on the basis of critical (and often unrealistic) interest rate assumptions. ” Page 1: Surprises with Life Insurance Page 2: Brian Grogan and Jim Vedder Elected to Board of Directors Nick Kaster and Pat Zomer Elected Shareholders Page 3: Moss & Barnett is Pleased to Recognize Aaron Dean, John Rossman, and Tom Shroyer Page 4: Tax Cuts and Jobs Act Page 5: Six New Attorneys Have Joined the Team: Lindsay Case, Gina DeConcini, Chelsy Jantsch, John Kennedy, Doug Mac Arthur, and Erik Romsaas Page 6: Section 363 of the Bankruptcy Code – A Tool for Buying and Selling Financially Distressed Assets Page 8: Moss & Barnett Spirit of Giving Page 9: Moss & Barnett Congratulates Kevin Busch, “Lawyer of the Year” For 2018 Page 11: Moss & Barnett Congratulates its Attorneys Included in 2018 Best Lawyers Moss & Barnett Named a “Best Law Firm” for 2018 Page 12: Did You Know? Moss & Barnett Celebrated 125 Years of Service in 2017 IN THIS ISSUE: Surprises with Life Insurance by Dave F. Senger Page 1 Many believe that their life insurance policy will deliver at his/her death iron clad benefits to their beneficiaries. That may not be the case. Many life insurance policies are designed to stay in force only on the basis of critical (and often unrealistic) interest rate assumptions being met over the life of the policy. Page 6 Section 363 of the Bankruptcy Code – A Tool for Buying and Selling Financially Distressed Assets by Cass S. Weil “Section 363” refers to the portion of the Bankruptcy Code that authorizes a debtor to sell its assets “outside the ordinary course of business.” Tax Cuts and Jobs Act Page 4 On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act into law, which makes a number of changes to the federal tax laws. The recently signed Tax Cuts and Jobs Act includes far-reaching changes for all United States taxpayers, including individuals, corporations, corporations with substantial international business, and small businesses.