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SENATE FINANCE PASSES COLI COMPROMISE ON VOICE VOTE.

Senate Finance Committee Chairman Charles E. Grassley (R-IA) succeeded Feb. 2 in getting a compromise measure through his committee on a voice vote that would restrict the circumstances under which corporate-owned life insurance benefits would continue to be tax-free.

The committee voted to require companies to notify workers they had purchased such COLI policies on their behalf and to give workers the opportunity to opt out of participating in the company's COLI program.

The committee voted to allow the policies to continue to be tax-free if the benefits went to the employee's family or if the employee could be considered a "key" individual of the company, with compensation of $90,000 or more a year or among the highest-paid quartile of the company's employees.

The vote was a victory for the American Council of Life Insurers, which estimates the annual market for COLIs is $8 billion, about 17 percent of the life insurance market.

The COLI provision is attached to the broader pension legislation, now to be considered by the full Senate, that includes a provision allowing workers to sell company stock placed into their 401(k) plans as matching contributions after working at the company for three years.

The House approved a similar bill, H.R. 1000 last year.
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Publication:Liability & Insurance Week
Date:Feb 9, 2004
Words:210
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