Industry Goes All Out To Stop COLI Taxation Legislation
The life insurance industry has launched a major effort to sidetrack Senate legislation that would tax the death benefit on corporate-owned life insurance policies.
David F. Woods, CEO of the National Association of Insurance and Financial Advisors, Falls Church, Va., calls the tax proposal an outrageous and unprecedented attack on legitimate uses of life insurance.
He says NAIFA members are also upset that the Senate Finance Committee saw fit to adopt the legislation behind closed doors and without a recorded vote.
Bob Plybon, president of the Association for Advanced Life Underwriting, Falls Church, Va., says the legislation already has put a damper on the marketing of COLI. There is a chill in the marketplace, he says, because of the uncertainty over whether the COLI provision will hold or not.
Plybon notes that the COLI provision applies to all policies sold after Sept. 17, 2003. This means, he says, all those policies would be subject to taxation of the death benefit if the provision becomes law.
The life insurance industry, Plybon notes, including AALU, NAIFA and the American Council of Life Insurers, is working together to educate members of the Senate and House leadership on the importance of COLI in funding employee benefits for thousands of companies.