Company Owned Life Insurance


  • Does your company need protection from the loss of key employees?
  • Does it need a way to fund transitional costs related to buy/sell agreements?
  • Does it need a more tax efficient way to fund employee benefits programs?

If so, this is a premium strategy you may want to implement.


What is COLI?

COLI is an acronym for Company Owned Life Insurance. If it’s a bank program it is known as “BOLI” for Bank Owned Life Insurance.

Time Proven Program

COLI programs have been around for decades, millions of people are already covered and 75% of Fortune 1000 companies have COLI programs in place.

Benefit to Organization

COLI can offer owners of smaller businesses the same types of benefits these huge companies enjoy. With a COLI program your company can provide FREE life insurance benefits for employees and 1099 workers thus creating a greater loyalty to your company. Plus, the program provides very substantial retirement benefits for these same employees as well as for the company owners.

Low Risk High Return Track Record Dating Back 80 Years

Over any 20-year period, dating all the way back to 1929, the same indexing strategies offered in our COLI programs have substantially outperformed the S&P 500. Plus, there are substantial tax advantages with a COLI program that a comparable investment in the S&P can never hope to match even when invested in tax deferred plans.

Why Aren’t All Organizations Using COLI Programs?

Many organizations are not familiar with COLI programs, their insurance agents don’t have the experience or expertise to implement them and thus aren’t actively marketing them and most important, many organizations simply don’t have the cash flow to finance a COLI program.

Who issues COLI policies?

Our associates have developed relationships with a large number of A and A+ rated insurance companies, as well as some of the largest funding sources. These funders will put up all the required funds for the program’s premium payments using the policy values as collateral for the payments. Your company will only need to post collateral for a fraction of the total loan. Qualified companies could also use a Letter of Credit (LOC) as collateral (usually at a cost of 1% of the LOC amount).

What Companies may be Qualified for a COLI program?

The Company and its owners must have a combined minimum net worth of 2.5 million dollars. Included in this amount are: cash, stocks, bonds, and other securities, real estate, art, antiques, home and of course, the value of your business. If you do not qualify, and many will not, we have alternative plans for smaller companies to get started with. These will require certain liquidity to pay for premiums.

Financial Benefits to Your Company

There are two sources of financial benefits:

First, the growth in value of the policies due to indexing. Our COLI program uses Indexed Universal Life Policies. These policies can increase in years the stock market goes up but they can never decrease when the stock market goes down. This is why our COLI policies have consistently outperformed the S&P 500 over the long term.

The second way you benefit is from the death benefits. Under this program we can write policies for up to 30 times an employee’s annual salary. However, in a pre-arranged agreement with your employee, you decide what portion of the death benefit will be paid to the employee’s estate. For your employees earning $75,000 annually and we write a policy for $1,500,000. If you agree to pay the employee’s estate 1/3 of the death benefit, you would be entitled to 2/3 of the benefit or $1,000,000. If you have 60 employees, at the time of their death, this portion of the program would be worth $60,000,000 to you less repayment of any loans.

It Gets Better!

Under this program, there are additional advantages:

  1. You can borrow money from the cash value of the policies tax free.
  2. Death benefits from employees who earn in excess of $105,000 are tax-free.
  3. Death benefits from 1/3 of employees who earn less than $105,000 are tax-free.

Although the death benefits will be taxable, we recommended that our clients consider insuring all their employees. Even though the death benefits from 2/3 of the employees earning less than $105,000 are taxable, since the cash outlay is minimal, if any, insuring everyone provides a benefit to them and extra income to you.

Leverage

Because there are funding sources that will lend all the funds to pay 100% of the premium and also the interest on these loans, there is very little if any, out-of-pocket cost to the business owner. Thus, you are not tying up needed cash that could be put to better use in your business and, you get a get a highly leveraged return on an investment that will return far greater gains than can be matched anywhere else.

Safety

COLI programs have very little risk because funds are used to buy life insurance policies from A or A+ rated carriers. These carriers all have a long-term 100% track record for paying the death benefit and since everyone eventually dies, payments will always be available to repay the loans with the balance going to the business owner and the employee’s beneficiaries.

A Word of Caution!

While we believe a properly structured COLI program is the best long-term strategy for the majority of business owners, the key is “Properly Structured.” Very few insurance agents have the experience and knowledge to marry the client to the right carrier. Many agents only have relationships with a handful of carriers while our associates have relationships with all the top companies. Further, our associates have access to proprietary software developed over a number of years at an extensive cost, to make a complete and accurate assessment of your situation, correctly match your needs with the proper carrier, prepare all the documents in a manner mandated by the carriers and funders and facilitate the process to conclusion in the shortest period of time.

The Next Step

Call us at 310-482-2352 to get a complete, no-cost analysis of this incredible opportunity to determine if a COLI program is right for you. This is your opportunity to get the same benefits that previously were only available for Fortune 500 companies and large banking institutions.

About our COLI Associates:

HK Wealth Management uses Mike Karpel & Associates, a Miami, FL based CPA and financial firm that has spent years developing and implementing COLI programs for business owners all over the country. Mike Karpel and his associates are some of the most knowledgeable and experienced people offering COLI programs and can perfectly match your needs to the most appropriate policies and insurance companies. They are one the largest writers of COLI programs in the country and can help you through the process in the fastest time with the least disruption to your business.