Male   Female
  • How does corporate-owned life insurance help me on the job?
  • January 21, 2014
  • Corporate-owned insuranceBy National Association of Independent Life Brokerage Agencies

    Michael Moore’s film, “Capitalism: A Love Story,” includes a small focus on a segment of the life insurance marketplace called corporate-owned life insurance, commonly referred to as COLI. Moore’s assertions on COLI, and some subsequent media reports, mis-characterize the truth about this important life insurance product.

    In the current fiscal environment, protecting jobs and employee benefits has never been more important. COLI serves both of these functions. COLI is a life insurance policy used by employers to keep businesses running and protect jobs after the death of owners or key employees. It also is used to finance employee benefits, including broad-based health, disability, survivor and supplemental retirement benefits.

    Through COLI, employers are taking the responsible step of setting aside assets to protect jobs and to make sure they are able to deliver on their employee benefit promises. Employers do not receive a tax deduction for purchasing COLI and employees pay nothing but receive substantial benefits in connection with the product.

    Congress has consistently reaffirmed the benefits of COLI. Most recently, it enacted the Pension Protection Act of 2006 on a broad bi-partisan basis after three years of study, enhancing requirements and safeguards by codifying COLI best practices with new section 101(j) of the Internal Revenue Code

    Indeed, well before the PPA and section 101(j), it was common practice for employers to take out COLI only on highly compensated employees after notice and informed consent. Section 101(j) makes clear that COLI can only be taken out on officers, directors and highly compensated employees with notice and their informed consent. To ensure compliance, the IRS requires annual reporting by employers on COLI usage. Non-compliance results in the taxation of policy proceeds. The PPA locks in responsible use of COLI by making non-compliance economically untenable. COLI should be seen for what it is: a way for responsible employers to protect jobs and benefits.

  • Category: Articles Library, Life Insurance, More news, Videos

Leave a Reply

Archives

About

Consumer Insurance Guide SM provides a wide selection of originally-authored articles and expert advice targeted to the self-directed insurance shopper. Our mission is to provide consumers with useful, money-saving information on all things having to do with making sound insurance purchase decisions.

Consumer Insurance Guide SM is owned by Life Quotes, Inc. 8205 South Cass Avenue, Darien, IL. For editorial, content feeds, advertising and lead purchase opportunities, contact Robert Bland at bob@lifequotes.com.

Originally founded in 1984 as Quotesmith Corporation, Life Quotes, Inc. owns and operates www.consumerinsuranceguide.com and www.lifequotes.com, two online consumer insurance information services that cater to the needs of self-directed personal and corporate insurance shoppers.

About Us  |   Contact Us  |   Press Releases  |   The Best Privacy Policy  |   Life Insurance  |   Careers
For Agents & Brokers  |   Site Map  |  


Copyright ©1984-2015 Life Quotes, Inc., 8205 South Cass Avenue, Suite 102, Darien, Illinois. Life Quotes, Inc. and certain of its personnel are licensed as insurance agents, brokers or producers in all states. CA agent #0A13858, LA agent #200696, MA agent #333509159. dba Life Quotes Insurance Services in CA under agent #0827712, in LA under agent #205078. dba Life Quotes Insurance Services, Inc. in UT under agent #90093. All rights reserved. Telephone (630) 515-0170. Founded 1984.
10.1.1.84