Insurers Concerned Senate Exec Bill Will Unintentionally Impact Split-Dollar Life

ACLI says this is a "double tax" that is entirely unnecessary and punitive.

"In addition, there is no reason to include split-dollar life insurance arrangements within the scope of this provision, especially in light of recently issued proposed regulations that fully tax employees on all corporate contributions to individual life insurance," ACLI says.

However, a possible attack on corporate-owned life insurance was sidetracked during the same markup.

Sen. Jeff Bingaman, D-N.M., offered language on COLI that would require businesses to treat payments received from COLI policies as income if the insured has not been an employee in the year preceding the insureds death.

However, he subsequently withdrew the language.

ACLI had criticized the language, arguing it would amount to a tax on the inside buildup of most business life insurance policies.

The language, ACLI said, would endanger the ability of businesses, including small businesses, to have necessary key employee and business succession life insurance, and to provide critical retiree benefits.

The markupwhich is a formal committee session during which members vote on the provisions of legislationwas continuing at press time.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.