Corporate Wealth Preservation. Business Continuity.
Transform your corporation’s life insurance from an expense into a powerful tax-efficient asset. Protect your key people and optimize your retained earnings.
Why COLI is a Critical Business Asset
Corporate-Owned Life Insurance (COLI) allows a business to insure its key stakeholders while creating a tax-sheltered environment for corporate capital.
Buy-Sell Funding:
Ensure the corporation has the immediate liquidity to buy out a deceased shareholder’s interest without depleting cash reserves.
Tax-Advantaged Growth:
Grow your company’s retained earnings inside the policy, shielded from the high passive income tax rates.
Key Person Protection:
Safeguard the business against the financial loss of a high-value executive or founder.
The Corporate Benefit
Utilize the Capital Dividend Account (CDA) to flow death benefits to shareholders tax-free.
Solidify your exit strategy with guaranteed funding for shareholder agreements.
Move taxable corporate investments into a tax-sheltered insurance contract.
Provide liquidity to heirs who aren't active in the business without selling company assets.
In many cases, COLI policies can be structured to offer a layer of protection from business creditors.
Access the policy’s cash value to fund corporate opportunities or executive retirement.
Aligning Insurance with Corporate Objectives
Our Expertise in Corporate Structuring
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Shareholder Agreement Audit: We ensure your policy matches the requirements of your buy-sell agreements.
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Tax Strategy Alignment: We work alongside your CPA and tax lawyers to maximize your corporate tax benefits.
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Ongoing Compliance: We provide annual reviews to ensure the policy reflects your company’s current valuation.
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When the corporation receives the death benefit, the portion that exceeds the policy's adjusted cost basis can be credited to the Capital Dividend Account (CDA). This allows the corporation to pay out a tax-free dividend to the surviving shareholders.
Generally, life insurance premiums are not tax-deductible. However, the tax-sheltered growth inside the policy and the tax-free payout usually provide a much higher internal rate of return (IRR) than traditional taxable investments.
The policy is a corporate asset. It can be transferred to the departing owner, kept by the corporation, or factored into the sale price of the company. We help you structure the policy with an "exit-ready" mindset.
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