Insurers Concerned Senate Exec Bill Will Unintentionally Impact Split-Dollar Life
Life insurance companies and agents are concerned that language in a Senate bill aimed at curbing alleged abuses in loans to corporate executives could unintentionally target split-dollar life insurance.
The concerns involve legislation being considered by the Senate Finance Committee involving corporate governance and executive compensation issues arising from Enron, WorldCom and similar controversies.
Sources told National Underwriter that at a Finance Committee markup of executive compensation legislation, committee staffers said it was not the intention to target split-dollar.
Nonetheless, the concern is that language could be interpreted to include split-dollar.
In a letter to Finance Committee leaders, the American Council of Life Insurers, Washington, says that the language appears to tax loans from employee-owned split-dollar arrangements on top of taxing the loan from a corporation to an officer to obtain the life insurance.
ACLI says this is a “double tax” that is entirely unnecessary and punitive.