More on COLI Financed NQDC Plans

Posted by Bob Burton on Tue, May 5, 2009 @ 06:45 PM

With the current “flight to safety” as a reaction to the devastation visited on retirement plans by the drastic stock market declines over recent months, life insurance is being looked upon more favorably than almost ever before.  This applies not only to individuals, but also to businesses.

This confirms the view expressed in one of our prior blog posts from AALU that COLI-financed NQDC plans, and particularly SERPs, could well be today’s “perfect sale”.  And for those executives who wish to devote a portion of their current pay, or perhaps their bonus, to accumulating funds for their retirement but are reluctant to put those funds at risk by making a deferral of pay that then becomes subject to the employer’s creditors, life insurance owned by the executive individually could be the best answer.  If a given employer has enough executives, even institutional COLI products could be used here effectively.

The bottom line is that cash-rich life insurance, whether a COLI policy to finance a NQDC plan or individually owned, has become a widely accepted vehicle for accumulating funds for retirement on a tax-favored basis.  Now is the time to call on the businesses in your area, particularly those where you already have a connection.