Industry Leaders Show Support For Senate Panels COLI Draft
The Senate Finance Committees draft language on corporate-owned life insurance unambiguously resolves concerns over notice and consent and coverage of rank-and-file employees, says the life insurance industry in a joint letter of support.
The letter was signed jointly by Frank Keating, president of the American Council of Life Insurers; Bob Plybon, president of the Association for Advanced Life Underwriting; and David F. Woods, CEO of the National Association of Insurance and Financial Advisors.
The letter came in response to a request for comments on the draft by the Finance Committee.
“The COLI draft includes a number of positive provisions that follow industry best practices concerning this critical employee benefit funding vehicle,” the letter says. “The concerns expressed in the media regarding employees being insured without adequate notice and consent are fully resolved by this COLI draft.”
The letter says the draft represents a “thoughtful compromise” relating to COLI concerns.
Specifically, the letter states, the draft includes a robust consent requirement under which all covered employees must receive advance written notice of coverage noting the fact that the coverage may continue after employment ends.
Moreover, the letter says, employees must give written consent prior to being insured.
The draft also prohibits employers from excluding from taxation income on death benefits for coverage on rank-and-file employees.
“While there are many appropriate situations under which an employer may have insured these employees, including using COLI policies to provide employee benefits to the same insured employees, the coverage for these employees has been the subject of considerable debate,” the letter says.
“The draft takes a conservative approach on this issue by essentially eliminating coverage for rank-and-file employees,” the letter notes.
A Finance Committee vote on the draft was scheduled for Jan. 28, but it has been postponed until the committee finishes work on a transportation bill.
In other news, the chairman of the Senate Special Committee on Aging says the nations tax laws should be reformed to make saving for retirement more tax-friendly.
“A recent report from the Department of Commerce shows that the personal saving rate has declined from 7.7% in 1992 to 2.3% in 2002,” says Sen. Larry E. Craig, R-Idaho. “At a time when savings should be going up, we see a dramatic decline.”
Craig spoke at a committee hearing on retirement savings and says he will work to remedy the situation.