Corporate Policies

Corporate - Owned Life Insurance, or "COLI," accounts for 20% of all new insurance sold in America. corporate owned life insurance is used for Executive Deferred Compensation, Key Person, Buy/Sell Agreements, and debt related purposes.

Deferred Compensation

Certain deferred compensation techniques, notably some Split-Dollar arrangements, have been successfully disqualified by IRS as being abusive. Until recently, when corporate owned life insurance insureds left the company, a secured debt was retired, or the company went through reorganization or liquidation, corporate owned life insurance policies were usually lapsed. It used to make sense to get rid of policies which were no longer tax- favored, appropriate, affordable, or otherwise not needed for their original purpose.

Reasons For a Corporate Policy Settlement

Business mergers and acquisitions may result in a policy that was previously purchased to finance a buy/sell agreement may no longer needed after the business has been sold to a third party, or Because of a change in ownership, a key-man policy no longer is necessary.

A business owns a key person policy on an executive who no longer is employed there. A company owns policies purchased to fund deferred compensation or retiree benefit programs after such programs have been changed.