Services
COLI
Corporate Owned Life Insurance
Tax-efficient funding for executive benefits
Corporate Owned Life Insurance (COLI) is a life insurance arrangement where the employer purchases, owns, and is the beneficiary of policies on the lives of key executives. COLI serves as a tax-efficient mechanism to offset the costs of employee benefit plans while building valuable corporate assets.
Many of the largest American companies—and the vast majority of financial institutions—use COLI as a funding tool for executive benefit programs. For companies with nonqualified deferred compensation plans, COLI has become the preferred funding vehicle for hedging benefit liabilities.
Primary Use Case
COLI is most commonly used to informally fund nonqualified deferred compensation (NQDC) plans. Companies typically purchase variable universal life (VUL) policies with investment options that mirror participant elections, creating an effective hedge against benefit liabilities.
Strategic Advantages
Why COLI?
Plan sponsors choose COLI to hedge deferred compensation liabilities, reduce associated income statement volatility, and provide greater benefit security to participants.
Tax-Advantaged Growth
Cash value accumulates tax-deferred, with tax-free withdrawals, loans, and death benefits when structured properly.
Liability Hedging
Creates an asset highly correlated to deferred compensation liabilities, reducing income statement volatility.
Benefit Security
Provides greater assurance to plan participants that promised benefits will be available when due.
Structure Your COLI Program
IIG's experienced team can help you design, implement, and administer a COLI program that meets your executive benefit funding objectives while maintaining full regulatory compliance.
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