Nonqualified Deferred Compensation Plans
- Thread starter ikeman07
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- compensation key man life
- 1,271
You don't make a single penny from selling DC plans. They are just documents agreed upon by the company and its select employees and drafted by the attorneys/CPAs. You make money by selling corporate owned CV life insurance as a general asset of the company that can grow tax-deferred and fund future compensations tax-exempt. On the paper it must not have anything to do with DC plan.
Since it's only a promise to pay in future and not a qualified plan, if and when the company no longer becomes a going-concern, the employee has to stand in line along with other creditors for her money. The general concept is very simple and you can learn enough about it by searching the internet or read a short book (again it's not your job to write the plan). COLI (IMO) is probably the best place to retain corporate earnings. Why more companies are not using them is only a mystery to me.
Since it's only a promise to pay in future and not a qualified plan, if and when the company no longer becomes a going-concern, the employee has to stand in line along with other creditors for her money. The general concept is very simple and you can learn enough about it by searching the internet or read a short book (again it's not your job to write the plan). COLI (IMO) is probably the best place to retain corporate earnings. Why more companies are not using them is only a mystery to me.
- 1,271
That's absolutely ridiculous. I have a lot of respect for your posts somarco but the fact that you put COLI and STOLI together in one breath shows that you're completely ignorant of the subject (I'm sorry). Key Man coverage, entity buy/sell, NQDC and other employee benefits funded by using COLI have been around before you were born, are completely legitimate, used by numerous large corporations and HAVE NOTHING TO DO with STOLI.
Find someone who has gone through the planning for businessowners/professionals course for their CLU or ChFC and borrow their text book.
Franz, COLI and SOLI have been used interchangeably in industry trades and MSM for some time now. While Key man, funded buy-sell, stock redemption, etc. can be examples of corporate owned life insurance one must be careful in using that acronym.
The WalMart case is one where the public in general discovered the term COLI and it was also used in trade pubs that followed the story.
The WalMart case is one where the public in general discovered the term COLI and it was also used in trade pubs that followed the story.
brookfieldpartners
Expert
Somarco,
I am agreeing with Franz on this one. 101j has helped clarify COLI from a rank and file perspective (which was the issue with the Wal-Mart case)
COLI and STOLI can't be used interchangeably, not saying that it hasn't, but they are totally different.
COLI is still a big tool in the executive benefits arena. Almost everything is under attack including traditional CV policies.
I am the State PAC chair for NAIFA, and we are fighting this every day. I don't forsee COLI disappearing, I anticipate we will see more regulation and restrictions, but it is not going anywhere.
In response to the original post, I have learned by doing. I use primarily SunLife COLI products, and they have some excellent materials.
For just NQDC in general I have found that John Hancock has great materials.
Do you have any questions in particular?
Feel free to hit me up brad at brookfieldpartners.com
I am agreeing with Franz on this one. 101j has helped clarify COLI from a rank and file perspective (which was the issue with the Wal-Mart case)
COLI and STOLI can't be used interchangeably, not saying that it hasn't, but they are totally different.
COLI is still a big tool in the executive benefits arena. Almost everything is under attack including traditional CV policies.
I am the State PAC chair for NAIFA, and we are fighting this every day. I don't forsee COLI disappearing, I anticipate we will see more regulation and restrictions, but it is not going anywhere.
In response to the original post, I have learned by doing. I use primarily SunLife COLI products, and they have some excellent materials.
For just NQDC in general I have found that John Hancock has great materials.
Do you have any questions in particular?
Feel free to hit me up brad at brookfieldpartners.com
- Thread starter
- #8
Yup, I know this part, I am wanting to use the NQDC plan to sell COLI and get soem good size cases and at the same time help boost owners & key person retirement picture. I am actually working a case now with a 30 year rep, but I was just wanting to get some more good info to read over Christmas.
brookfieldpartners said:
I will put this question out to everyone...Is there a specific market, client segment, gross/net revenue, etc.. that this makes the most since for. Who do you typically market this to? Specifics would be great! Basically, what does your ideal client look like for this type of product?
I have been in the investment side of the business for 4 years, just made a move to include insurance in my business 4 months ago. I have been lurking on this forum for over a year mostly just reading and learning. I appreciate everyone's input and I hope to be able to add my own as time goes own. Thanks again!
- 1,271
I understand the recent media screw up regarding the subject. I guess my frustration was directed more toward them so I hope you didn't take too much offense at what I said. Even with the WalMart Case, if one would take their time to study it, one would realize their "janitor insurance" really helped the rank and file to receive some excellent benefits which are gone now due to media screw up.
Doesn't that link to the Wal Mart case support the argument that COLI isn't something a business buys on rank and file employees. If I'm not mistaken, the court decision was that Wal Mart couldn't purchase life insurance on those employees under COLI provisions because Wal Mart didn't have a significant financial interest in their lives. Proof that COLI cannot be used on just anyone.
