NU Online News Service, Oct. 1, 2003, 5:59 p.m. EDT — Washington
In a victory for the insurance industry, the Senate Finance Committee today agreed to modify a corporate-owned life insurance provision that has chilled the COLI market.
As part of its consideration of an international tax amendment to the Internal Revenue Code, the Finance Committee agreed to change the effective date of the COLI provision, which was approved last week, from Sept. 17, 2003, to the date of enactment of the legislation.
In addition, the committee agreed to conduct a separate hearing on COLI in two weeks and then reconsider the COLI provision.
The controversy surrounds an amendment to a pension reform bill that would tax the death benefits from COLI policies covering employees who die more than one year after leaving employment.
There would be an exception for policies covering key employees, but the number of key employees would be capped at 20.
Life insurance agents say the Sept. 17 effective date of the proposed changes caused the market for COLI policies to dry up.
Specific language for today’s modification was not available as of this writing.