Corporate Owned Life Insurance

In order to attract and retain top talent, companies offer a variety of benefits, some qualified such as like 401(k), Profit Sharing & Defined Benefit Plans and some non-qualified such as Deferred Compensation Plan & health insurance benefits at retirement. Qualified plans must be funded when you offer to your employees but non-qualified plans are not required to be. But whether qualified or non-qualified, offering employee/executive benefits creates a financial obligation for the company, and many companies set aside funds in a variety of ways in order to meet those obligations.

One of the most attractive and flexible financing options is Corporate Owned Life Insurance (COLI). Corporate owned life insurance provides tax-free money when the company needs to fulfill its long-term executive/employee benefits liability. It also provides liquidity should the need arise.

Here’s how COLI works. The company purchases a specially designed life insurance policy on key executives other senior employees. Because the company owns the policy – and pays the premiums as well – the company receives the death benefit proceeds if the insured executives die prematurely or at their life expectancy. Medical examination may or may not be necessary for approval of the COLI depending on the number of employees, the face value of the policy or policies, and other factors.

Recent industry surveys show that 75% of the Fortune 1000 companies have COLI plans in place at the present time, and the reasons are very clear:

  • The after-tax yield of a COLI is very competitive compared with other investment options
  • Death benefits are tax-free to the company and can far exceed the costs of the plan in long term
  • A COLI can help to fund other benefit plan expenses, particularly those that are unfunded

While insured employees don’t receive any benefits from a COLI plan, most don’t object, either. Such plans make the company more financially viable in general, and while employees can select not to participate, studies show that very few do.

What would seem to be an important factor in evaluating the institution of a COLI is employee turnover, which is much higher today than in past decades. A COLI plan can continue to cover insured employees even after those employees have left the firm. Because the company owns the policy, only the company can dictate whether it continues, is terminated, transfer on other employee or surrendered for the cash value. It’s a worth idea to consider!

Find out why so many of the top organizations are using COLI programs, and how one could help your organization. COLI arrangement and is complicated and requires experienced advisers and third party administrator (TPA) to establish and manage for you. We have set up and are managing thousands of Split Dollar, Deferred Compensation, Defined Benefit and other Executive Bonus Plans across the country for last 17 years for sole proprietorship to large corporations. Please call (877) 972-3262 or contact us for the further information.

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Regardless of the topic or question, BeamaLife has unique individuals with the right background to address my concerns. As a result, I have a much clearer understanding of how certain wealth creation strategies were the right fit for my company. I also have been able to take much higher income tax deductions for the corporation by implementing a plan set forth by Neil Jesani. They have maintained an unmatched level of professionalism during my interactions with them over the years.”

Mr. Peters
Software Company Owner, California

“BeamaLife was referred to me by my CPA for my pension plan funding. I also wanted to take care of my estate tax need. Neil and his team have done a superb job of creatively funding my pension plan, acquiring most cost-effective life insurance for our estate planning need with very minimum out pocket using velocity of money principle and putting my existing investment to second use. They also help us setting up all our estate planning documents.”

Dr. Martin
New Jersey

“BeamaLife has been a great advisor to us for many, many years. They not only helped us take higher income tax deductions but, also helped us organize our investment portfolio in an efficient manner. Through this relationship, we were able to create substantial wealth with the very low out-of-pocket expense. Neil Jesani from BeamaLife is very responsive, professional and extremely knowledgeable”

Mr. Sakaria
Multiple Pharmacy Owner, New York

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