Category Archives: COLI

The greatest asset of any successful business does not appear on the balance sheet. It walks out the door every evening at five o’clock. Most owners have felt the late‑night version of that thought: what happens if the executive who keeps the wheels turning is recruited by a competitor? Or, less dramatically but more commonly, what happens when that person decides they have hit a ceiling because their retirement plan is capped out and nothing else is on offer?

In executive retention, standard benefits are rarely enough. This guide covers what nonqualified deferred compensation plans are, how the main structures differ, how companies fund the promise, and how to decide which design fits. For the compliance side — election timing, penalties, and the 2026 statutory changes — see our complete guide to 409A deferred compensation plans. For the wider picture of how these plans fit alongside everything else you can offer a key executive, see our executive benefits guide for business owners.

What Are NQDC Executive Benefits?

Nonqualified deferred compensation plans are arrangements that let an employer provide retirement and retention benefits to a select group of management or highly compensated employees. Unlike a 401(k), which is qualified under ERISA and subject to strict contribution and nondiscrimination rules, an NQDC plan is nonqualified. It is exempt from most of those caps, which allows for much larger deferrals and far more flexible design.

At its core, an NQDC plan is a promise. The company agrees to pay the executive a defined amount at a future date — usually retirement, separation, disability or death — in exchange for service today. Because these plans are discretionary, you choose exactly who participates. You do not have to offer them to everyone. You offer them to the people who actually move the business.

Qualified vs Nonqualified: Why the Ceiling Matters

If you have ever been frustrated by 401(k) testing or by contribution limits that your highest earners blow through in the first quarter, you already understand the problem an NQDC plan solves.

A qualified plan must be broadly available and nondiscriminatory. For 2026 the elective deferral limit is $24,500, with an $8,000 catch‑up from age 50. For an executive earning $400,000, deferring $24,500 replaces a small fraction of working income. The plan that is adequate for most of your workforce is structurally incapable of doing the job for your leadership.

A nonqualified plan inverts each of those constraints. You can:

• Select participants individually. One person, or five, or the top tier of management.


• Defer much larger amounts. Frequently a substantial share of salary and all or most of a bonus. There is no statutory ceiling.


• Set custom vesting. Five years, ten years, a stated age, a change in control, or a performance condition.


• Differentiate benefits by person. The arrangement for a chief operating officer need not match the arrangement for a divisional head.

That flexibility is the entire appeal. It is also why the plan has to be documented carefully: the same discretion that lets you design around a specific person lets you design something the tax code will not respect.

How an NQDC Plan Actually Works

The mechanics are more straightforward than the reputation suggests:

1. The agreement. The company and the executive sign a plan document and a participation agreement specifying the amount, the vesting schedule and the payment trigger.


2. The contribution. Either the executive defers part of their own compensation, or the employer credits a discretionary amount, or both.


3. The accrual. The balance is credited with earnings — a fixed rate, an index, or the return on a notional portfolio — and grows without current tax to the executive.


4. The funding. The company typically sets aside corporate assets, most often corporate‑owned life insurance, so the cash is available when the obligation falls due.


5. The payment. At the trigger event, the company pays. The executive recognizes ordinary income then; the company takes its deduction then.

Note the ordering in that last step. The employer’s deduction is deferred until payment, which is the central economic trade‑off of these plans and the reason the funding question deserves as much attention as the design question.

Types of NQDC Executive Benefit Plans

Not all plans do the same job. The structure should follow from what you are trying to accomplish.

Employer‑funded (discretionary) plans

Funded entirely by the company, these are the strongest retention tool in the category. Rather than paying a cash bonus that is taxed immediately at top marginal rates, the company credits the amount to a deferred account that grows tax‑deferred, with the executive taxed only on receipt. Benefit levels can be tied to a performance formula, company‑wide goals or individual measures. Because the company sets the vesting schedule, this is where golden handcuffs are built. We go deeper on this structure in employer‑funded NQDC plans.

Employee‑funded plans: the 401(k) mirror

A mirror plan lets executives defer their own salary and bonus as though the 401(k) limits did not exist. Many high earners hit the qualified limit by February or March; the mirror plan picks up where it stops. It often uses the same investment menu as the company 401(k), which makes it familiar and easy to explain. This is primarily a tax‑planning benefit for the executive rather than a retention device for the company, and it costs the employer very little.

Supplemental executive retirement plans

A SERP is the defined‑benefit member of the family. It promises a specific amount — a monthly income or a stated lump sum — at retirement, filling the gap between what the executive has accumulated and what their standard of living actually requires. For a key leader, it becomes the fixed anchor of the retirement picture. If you are weighing this against an account‑balance design, SERP vs NQDC compares them directly.

Phantom stock

Phantom stock gives key people the ownership feel without issuing equity, diluting existing owners or granting voting rights. Units track the value of the company, so if enterprise value rises, the executive’s account rises with it. It aligns day‑to‑day decisions with the total value of the business, which makes it a natural fit for a company heading toward a sale or a generational transfer.

Split dollar life insurance

Split dollar programs share the cost and the benefit of a life insurance policy between the company and the executive. Properly built, they are among the most cost‑efficient ways to provide substantial protection to an executive’s family while allowing the corporation to recover what it spent. Loan regime arrangements are generally outside 409A, which is part of their appeal, but that treatment depends on how the arrangement is written. We walk through a combined structure in how split dollar and REBA create win‑win executive retention.

Restricted executive bonus arrangements

A REBA uses a restricted bonus to build a tax‑advantaged retirement bucket for the executive while the company retains control of the asset until stated conditions are satisfied. It is simpler to administer than a full NQDC plan and often the right answer for a company that wants a meaningful benefit without a complex plan document.

Golden Handcuffs: Designing the Vesting

The retention power of these plans comes almost entirely from the vesting schedule. Through an employer‑funded plan you can credit compensation that vests only over a long horizon — five years, ten years, or at a stated age — or only on retirement from the company.

If the executive leaves early, they leave the money behind. That is a concrete, quantified reason to stay, and it compounds each year they do. The framing matters, though: this works when the executive sees a benefit they cannot get elsewhere, not when they feel held in place. A schedule so long that it reads as a trap tends to produce the resentment it was meant to prevent. The schedules that work are the ones the executive would choose if they were designing them.

How to Fund the Promise

Designing the plan is half the work. The other half is making sure the money is there, because an NQDC plan is technically an unfunded promise to pay. No assets are formally dedicated to the executive. The company therefore needs an informal funding strategy that matches the timing of the liability.

The usual options:

• Fixed interest accounts. Principal security and a predictable crediting rate. Appropriate where the obligation is fixed and near‑term.


• Market‑based accounts. Corporate assets invested to track the notional portfolio the plan credits, which keeps the asset and the liability moving together.


• Indexed products. Upside participation with a floor, for companies that want growth without full market exposure on the balance sheet.


• Corporate‑owned life insurance. The most common choice, for the reasons below.

Why COLI is the usual answer

The company owns a policy on the insured executive. Cash value accumulates tax‑deferred, and the company can access that cash value to pay benefits as they come due. When the insured eventually dies, the death benefit is received by the company income‑tax‑free, which can recover the benefits paid plus the cost of the premiums. That combination — tax‑deferred accumulation during the accrual years and tax‑free recovery at the end — is what makes full cost recovery achievable rather than theoretical.

Two conditions attach. The policy has to satisfy IRC §101(j) notice and consent requirements before issue, or the death benefit becomes taxable, and that defect cannot be repaired afterward. And the policy has to be designed for cash value accumulation rather than maximum death benefit, which is a different product configuration than most buyers expect. Our COLI FAQs cover both in detail.

Rabbi trusts and the security question

Executives being asked to defer meaningful money reasonably ask what protects them. The honest answer is that nothing fully does, by design. If assets were legally set aside beyond the reach of the company’s creditors, the arrangement would be funded for tax purposes and the deferral would collapse.

The common middle ground is a rabbi trust: corporate assets are placed in an irrevocable trust that can only be used to pay plan benefits, which protects the executive against a change of heart, a change of control or a change of management. It does not protect against insolvency, because the trust assets remain available to general creditors in bankruptcy. That is the precise limit of the protection, and it is worth stating plainly to any executive before they defer a large share of their compensation. A secular trust can offer real protection, but it triggers current taxation and therefore defeats the purpose for most participants.

The Tax Picture

The advantage of these plans is a timing difference, and it cuts both ways:

• For the executive. Income is deferred out of peak earning years and recognized in retirement, often at a lower marginal rate, while the balance compounds without annual tax drag. The deferral also moves income out of years when other thresholds and phase‑outs bite.


• For the employer. No deduction until the benefit is actually paid, which is the cost of the arrangement. In exchange, the funding assets can grow tax‑efficiently, and with COLI the company can recover its outlay at the end.

One caution worth stating. A deferral is a bet that the executive’s rate in retirement will be no higher than their rate today, and nobody controls future rates. For an executive who will have substantial other taxable income in retirement, the arithmetic is less compelling than it first appears, and deferring everything available is rarely the right answer.

409A: The Rule Behind the Design

Everything above assumes the plan complies with IRC §409A, which governs when deferral elections must be made and when amounts may be paid. The penalties for failure fall on the executive — immediate taxation of all deferred amounts, an additional 20% federal tax, and premium interest — which makes compliance a retention issue and not merely an administrative one.

The full treatment, including the 2026 changes to §162(m) and §4960, is in our 409A compliance guide. If you suspect an existing plan has a problem, start with 409A corrections, because relief depends heavily on how quickly the error is found.

Where Our Technical Perspective Comes From

In 2003 and 2005 I served as a member of the AALU’s NQDC Committee alongside Michael Goldstein. In that role I was part of the industry dialogue with the IRS and Treasury while the regulations governing 409A and 101(j) were being written, and I contributed technical input during that process. Understanding what the rules were trying to accomplish is what makes the gray areas navigable.

On The Perfect Plan® Podcast I sat down with Dan Hogans, who was at the U.S. Treasury Department and worked on the 409A regulations, to discuss the regulatory history and how these rules interact with split dollar and corporate structures. You can watch that conversation here.

Is an NQDC Plan Right for Your Business?

These plans suit an established, profitable company with a small number of genuinely difficult‑to‑replace people and enough stability to make a long‑dated promise credible. They suit a company facing a transition — a sale, a generational handoff, a key executive approaching retirement — where the cost of losing continuity is concrete.

They are a poor fit where cash flow is uncertain, where the promise would not be believed, or where the real problem is compensation today rather than security tomorrow. A deferred benefit does not fix a salary that is below market.

The questions we start with are simple enough to answer on a single page:

• Which individuals would genuinely damage the business by leaving, and what would replacing them actually cost?


• Is the goal retention, retirement adequacy, an ownership stake without equity, or protection for a family?


• Can the company commit the cash required to fund the promise for as long as it runs?

The answers determine the structure. A retention problem and a retirement‑adequacy problem look similar from a distance and call for different plans.

Frequently Asked Questions

What is the difference between a 401(k) and an NQDC plan?

A 401(k) is qualified: broadly available, nondiscriminatory, subject to annual contribution limits, and held in trust beyond the reach of company creditors. An NQDC plan is nonqualified: offered selectively, without statutory contribution limits, and an unsecured promise of the employer. The 401(k) is safer; the NQDC plan is larger and more flexible.

How much can an executive defer into an NQDC plan?

There is no statutory limit. In practice the plan document sets the cap, commonly expressed as a percentage of salary plus a percentage of bonus. The practical constraints are the company’s ability to fund the obligation and the executive’s own need for current income.

Who is eligible to participate?

Participation must be limited to a select group of management or highly compensated employees to preserve the ERISA top‑hat exemption. There is no bright‑line test for how small that group must be, which is why eligibility that broadens quietly over several years is a genuine risk to the exemption.

What happens to the deferred money if the company is sold?

It depends on the plan document. Many plans treat a change in control as a vesting event, a payment trigger, or both, and a rabbi trust prevents new ownership from simply repudiating the obligation. This is one of the most important provisions in the document and one of the most frequently left to a default.

Can a business owner participate in their own NQDC plan?

Often, though it requires care. Deferring your own compensation moves a deduction into the future while giving you an unsecured claim against your own company, which may not be an improvement. For owners, the analysis usually depends on entity type and on whether the goal is the owner’s own retirement or the retention of non‑owner executives.

What happens if a participant dies before payment?

The plan document controls, and well‑drafted plans address it explicitly: the balance is typically paid to a named beneficiary on a stated schedule. Where the plan is funded with life insurance, the policy death benefit gives the company the cash to make that payment, which is one of the quieter arguments for COLI.

Do NQDC deferrals reduce payroll taxes?

Generally no. FICA is usually due when the amount vests rather than when it is paid, so Social Security and Medicare taxes are typically settled before the executive receives anything. The deferral is an income tax deferral, not a payroll tax one, and the timing rule here is a common source of error.

How long does it take to put a plan in place?

A straightforward mirror plan or REBA can be documented and funded in a few weeks. A SERP or phantom stock plan for several executives, coordinated with your attorney and CPA and with underwriting on the funding policies, more realistically takes a couple of months. Deferral election deadlines make the calendar matter: a plan intended to cover next year’s compensation generally has to be in place before this year ends.

Next Steps

We do not sell products off a shelf. We reverse‑engineer the plan from your goal backward, working alongside the advisors you already have — your accountant, your attorney and your TPA — so the benefit fits your tax position and your ownership structure rather than conflicting with them.

If you want to see how your current benefits compare, or you are starting from nothing, begin with a clear picture of what the business is worth and where the gaps in your retention strategy actually are. Sit back, grab your coffee, and let’s start the conversation. Let’s build The Perfect Plan®.

BOLI for banks, COLI for corporations ![[HERO] Bank and corporate executives collaborating on BOLI and COLI planning for employee benefits and executive retention.](https://images.pexels.com/photos/3183150/pexels-photo-3183150.jpeg)

In business, clarity beats complexity. The right tool in the right hands can solve the right problem. The wrong tool, even if it looks similar on paper, creates confusion fast.

If you are a bank leader, you do not need to wonder whether COLI belongs on your balance sheet. It does not. If you are running a corporation, LLC, or partnership, you do not need to sort through BOLI literature. It is not your vehicle.

At Schiff Executive Benefits, we spend our days answering these "What If's." What if top talent leaves? What if retirement costs are rising faster than expected? What if a buy-sell obligation shows up before you are financially ready? We do not start with a product. We reverse engineer solutions based on your goals, your entity type, and your regulatory environment.

That is why this conversation is not about competition between BOLI and COLI. It is about fit. Both use employer-owned life insurance mechanics. Both can support long-term executive benefit planning. But they belong in different worlds.

The Right Tool for the Right Job

The easiest way to frame this is simple.

If you are a bank, credit union, or thrift, you are in the BOLI world.
Bank-Owned Life Insurance is a specialized asset class for financial institutions. It is used to help informally fund employee benefits and generate tax-advantaged income on the institution's balance sheet. It is also heavily regulated by the OCC, FDIC, and state banking departments, which means design, due diligence, and administration matter. You can learn more about our specific BOLI consulting services here.

If you are a corporation, LLC, or partnership, you are in the COLI world.
Corporate-Owned Life Insurance is the broader planning tool for non-bank businesses. It is often used to support executive retention strategies, key-person coverage, buy-sell planning, and nonqualified deferred compensation (NQDC) plans. For companies evaluating deferred compensation design, it also pairs naturally with broader executive benefit planning.

The mechanics may be similar. The use cases may overlap at a high level. But the entity determines the vehicle.

 

Where COLI Fits in the Corporate World

For corporations, LLCs, and partnerships, COLI is often part of a much broader retention and succession strategy. Many business owners are asset rich and cash poor. Their value is tied up in the business. That works well until a buyout, retirement, death, or executive transition forces a liquidity event.

If you have a buy-sell agreement in place, how will it be funded? If a key executive retires, how will you replace that talent cost-efficiently? If your best people are being recruited, what are you doing today to make staying more valuable than leaving?

This is where COLI can shine. A properly structured plan can help fund obligations tied to executive retention, deferred compensation, key-person risk, and ownership transition. It can create what we call an Ownership Feel to Non-Owners while helping the business maintain control, liquidity, and long-term alignment.

For banks, those same broad concerns may exist. But the funding vehicle is BOLI, not COLI. That distinction matters.

The "In the Room" Expertise: IRC 101(j) and 409A

Rules matter. Entity type matters. Documentation matters. This is where a lot of well-meaning advisors get lost.

When we talk about BOLI and COLI, we are not reading from a brochure. Matt Schiff brings a deep technical legacy to this work. Back in 2003 and 2005, he was in the room where it happened. As a member of the AALU's NQDC Committee, he worked alongside Michael Goldstein to provide technical input on the very laws that govern these plans today: IRC 409A and IRC 101(j).

That matters because these rules do not disappear just because you picked the right entity-specific vehicle. IRC 101(j) and 409A apply to both BOLI and COLI where relevant. Whether you are a bank implementing BOLI or a corporation structuring COLI around deferred compensation, technical compliance is still the backbone of a successful outcome.

If you want to hear more about that era and the technical nuances of these regulations, I highly recommend listening to my podcast interview with Dan Hogans, who was formerly with the U.S. Treasury Department and was a key architect of these rules.

The 101(j) Trap

One area where many generalist advisors trip up is IRC 101(j). This regulation governs employer-owned life insurance. To keep the death benefits of a BOLI or COLI policy income-tax-free, you must comply with strict notice and consent requirements before the policy is issued.

If you fail to get the employee's written consent or fail to file the annual IRS Form 8925, the death proceeds that should help the business can suddenly become taxable income. We see this all too often in legacy plans that have never been audited. At Schiff Executive Benefits, we make sure your program is designed to comply from day one, Restoring Alignment and Retention to your organization.

The Perfect Plan^® Starts with the Right Vehicle

In today’s competitive landscape, good enough benefits do not cut it. Your best people are being recruited every single day. To keep them, you need a strategy that fits your organization and speaks directly to the outcomes your leadership team cares about.

This is why we developed The Perfect Plan^®. It is not just a product. It is a philosophy. The process starts by identifying the right vehicle for the right entity, then designing the plan around the outcome.

That means:

• Banks may use BOLI to help fund employee benefits and create tax-advantaged balance sheet support.


• Corporations, LLCs, and partnerships may use COLI to support Deferred Compensation (NQDC), executive retention, key-person coverage, and buy-sell planning.


• Both require thoughtful design, regulatory awareness, and coordination with your broader advisory team.

Imagine telling your top executive: If you stay with us for the next ten years, we have a plan that provides 100% income when you need it most in retirement, and 100% protection for your family if something happens to you tomorrow.

That is the power of a properly structured plan. It aligns the executive’s personal financial goals with the company’s long-term health.

Why the "Reverse Engineering" Approach?

Most brokers start with a product. We do not work that way.

We work as a broker with any carrier, which allows us to stay agnostic. We start with your "What If's."

• Are you a bank trying to offset benefit costs efficiently?


• Are you a corporation preparing for a business buyout?


• Are you concerned about the cost of replacing a senior executive?


• Are you looking for cost recovery for the employer?


• Are you trying to keep your top talent from leaving?

Once we have the goal, we reverse engineer the solution. We work alongside your existing team of advisors: your Accountant, Attorney, and TPA: to ensure that the BOLI or COLI structure fits your legal, tax, and cultural framework.

Your Next Steps

Building a business is hard. Protecting it should not be. The first step is simple: identify your world.

If you are a bank, credit union, or thrift, your conversation starts with BOLI and the banking guidance that surrounds it. If you are a corporation, LLC, or partnership, your conversation starts with COLI and how it supports retention, buy-sell planning, and deferred compensation.

If you are ready to see how the right vehicle fits into your situation, I invite you to take a low-pressure first step. Use our Business Valuation tool to get a clearer picture of what you have built.

From there, we can sit down, grab a coffee, and talk through the practical next move. If you want to go deeper first, explore our Deferred Compensation and NQDC planning page, our COLI strategy overview, or our BOLI consulting page for banks.

To stay updated on the latest strategies for business owners and executives, visit our latest posts here or join the conversation over at The Perfect Plan^® on YouTube.

Learn more: our complete guide to Bank Owned Life Insurance (BOLI) and Corporate Owned Life Insurance (COLI).

 

In the world of institutional finance, capital is the lifeblood of growth, yet for insurance carriers, it is also a highly regulated and scrutinized resource. Managing a balance sheet while simultaneously trying to attract and retain the industry’s brightest minds is a delicate act of precision. How do you deploy surplus capital in a way that is both productive and capital-efficient?

Institutional Corporate Owned Life Insurance (iCOLI) is a specialized subset of the broader Corporate Owned Life Insurance (COLI) market, specifically engineered for the unique regulatory and financial landscape of insurance carriers. While traditional COLI is used by general corporations to fund executive benefits, iCOLI goes a step further, optimizing the carrier’s capital structure while providing a robust vehicle for executive retention and recruitment.

What Makes iCOLI Different?

At its core, iCOLI is life insurance owned by an insurance company on the lives of its key executives. However, unlike standard policies, iCOLI is built for the institutional scale. It is an "admitted asset" on the balance sheet, meaning it is recognized by regulators as a valid piece of the company’s financial strength.

The primary driver for carriers is the Risk-Based Capital (RBC) treatment. In an environment where every dollar of capital must be allocated with extreme care, iCOLI offers a significant advantage:

• Life Insurers: Typically face a 0% RBC charge for iCOLI.


• Property & Casualty (P&C) Insurers: Typically face a 5% RBC charge.

Compared to other asset classes that might carry a much higher capital drag, iCOLI allows a carrier to deploy surplus capital into a tax-advantaged vehicle with minimal impact on their required capital ratios. This is capital efficiency at its finest: restoring alignment between corporate goals and regulatory realities.

Solving the "What Ifs" of the C-Suite

For the decision-makers at insurance carriers, the primary concern is often the "What If" regarding their human capital. What if our top talent leaves for a competitor? What if we are not providing a competitive enough retirement package to keep our senior leadership engaged?

Because iCOLI is an institutional-grade product, it is the ideal engine for funding sophisticated Non-Qualified Deferred Compensation (NQDC) plans and Supplemental Executive Retirement Plans (SERPs). It provides the company with:

1. Tax-Deferred Growth: The cash value within the policy grows without immediate tax liability.


2. Cost Recovery: The death benefit can be structured to recover the costs of the executive’s benefits, the premiums paid, and the cost of money.


3. Liquidity: The policy remains an admitted asset that can be accessed to meet future benefit obligations.

The Expert in the Room

When dealing with iCOLI, compliance is not just a checkbox; it is a fundamental requirement. Navigating the complexities of IRC Section 101(j) and IRC Section 409A requires more than just a broker: it requires an architect who was "in the room where it happened."

Matt Schiff, President of Schiff Executive Benefits, brings a unique level of authority to these discussions. As a member of the AALU’s NQDC Committee, Matt provided technical input on the very laws that govern these programs today. His deep technical expertise ensures that your iCOLI program is not only high-performing but also fully compliant with the rigorous standards of the IRS and the NAIC. For those interested in the technical nuances of these regulations, we highly recommend listening to The Perfect Plan^® Podcast interview with Dan Hogans, a former official from the U.S. Treasury Department, who worked alongside Matt during the development of these critical tax codes.

The Perfect Plan^® for Carriers

We believe that every executive benefit program should be reverse-engineered starting with your specific goals. For insurance carriers, those goals usually include maintaining a strong RBC ratio while building a Perfect Plan^® that secures the loyalty of their top leadership.

iCOLI is a powerful tool in that arsenal, but it is just one part of the conversation. If you are ready to see how this fits into your larger corporate strategy, we invite you to take the first step.

Determine your business's current standing and valuation through our RISR assessment tool here.

Looking for a deeper dive into the mechanics, historical context, and advanced strategies of iCOLI? Read our comprehensive guide: Institutional Corporate Owned Life Insurance (iCOLI): The Deep Dive.

At Schiff Executive Benefits, we help you plan for all of life's "What If's" while ensuring your business remains competitive, compliant, and cost-effective. Come join us( let’s build your legacy together.)

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Learn more: Corporate Owned Life Insurance (COLI).

The Short Answer

Corporate Owned Life Insurance (COLI) is life insurance a company buys on the lives of selected employees, where the company owns the policy, pays the premium, and is named beneficiary. Businesses use COLI as a tax-advantaged balance sheet asset to informally finance executive benefit obligations — deferred compensation, supplemental retirement promises, split dollar arrangements — with the goal of recovering the cost of those benefits over time. Cash value inside the policy generally grows tax-deferred, and death proceeds are generally received income-tax-free, provided the company satisfies the notice and consent requirements of IRC 101(j) before the policy is issued.

COLI is also called company owned life insurance or employer-owned life insurance. When the buyer is a bank, the same structure is called BOLI. When the buyer is an insurance carrier, it is called iCOLI. The mechanics are largely the same; the regulator and the accounting context differ.

What Is Corporate Owned Life Insurance?

At its core, COLI is employer-owned life insurance placed on eligible employees for a legitimate business purpose. The structure has four moving parts:

• The company owns the policy. It holds every incident of ownership — the right to borrow, surrender, change the beneficiary, and direct any investment allocation.


• The company pays the premium. Premiums are not deductible. This is a capital allocation decision, not an expense strategy.


• The company is the beneficiary. Proceeds are payable to the business, though many designs share a portion with the insured's family as an added benefit.


• The insured employee gives written notice and consent before issue. This is not a formality. Miss it and the tax treatment of the death benefit changes permanently.

The planning value is not in the insurance itself. It is in what the asset does inside the business. A properly designed COLI case takes capital that would otherwise sit in taxable short-term instruments and repositions it into a vehicle whose growth is tax-deferred, whose eventual proceeds are generally tax-free, and whose timing can be matched to a liability the company has already promised to pay.

How COLI Life Insurance Works as a Balance Sheet Asset

COLI should be evaluated as a long-term corporate asset, not as a current-year tax play. The policy's cash surrender value is carried as an asset on the company's books. Growth inside the contract is generally not currently taxable. For a business comparing alternatives, that can create a materially more efficient holding environment than fully taxable fixed income or short-term corporate cash.

The analysis that matters is a comparison, not an absolute. The question is never "is COLI a good asset?" It is "compared to the taxable alternative this company would otherwise hold for the same duration, what is the after-tax outcome?" That comparison depends on the company's marginal tax rate, its holding period, its liquidity needs, and its tolerance for an asset that is not marked to market daily.

What COLI Is Typically Used to Finance

• Nonqualified deferred compensation liabilities, including employee-deferral plans and employer-funded arrangements


• Supplemental Executive Retirement Plan (SERP) obligations


• Split dollar program financing


• Phantom stock and other synthetic equity payouts


• Key person risk — replacing the economic loss when a critical executive dies


• Buy-sell and business succession funding


• General long-term benefit obligations that sit on the balance sheet without a matched asset

The common thread is duration. Every one of these is a promise the company has made that comes due years from now. COLI is a way to hold an asset whose characteristics resemble the liability it is meant to support.

COLI vs. BOLI vs. iCOLI: Which Applies to You

The three acronyms describe the same fundamental structure under three different owners, and they are frequently confused.

• COLI — Corporate Owned Life Insurance. Bought by an operating company, professional firm, or partnership. Governed by the general tax rules discussed on this page.


• BOLI — Bank Owned Life Insurance. Same structure, bank buyer, plus a layer of banking regulation. Federal regulators expect banks to conduct a pre-purchase analysis and to observe concentration guidance relative to capital.


• iCOLI — Institutional Corporate Owned Life Insurance. Bought by insurance carriers to optimize capital and surplus. Different accounting regime, different risk framework.

If you are trying to decide which structure fits your institution, our companion piece on choosing between BOLI and COLI covers the decision in detail.

IRC 101(j): The Rule That Makes or Breaks a COLI Case

This is the single most important technical rule in employer-owned life insurance, and it is where most damaged cases go wrong.

Before the Pension Protection Act of 2006, employer-owned death benefits were generally income-tax-free with few conditions. The Act added IRC 101(j), which reversed the default. For an employer-owned life insurance contract, death proceeds are now taxable income to the employer above the premiums paid unless the arrangement satisfies both a notice-and-consent requirement and one of several exceptions.

The Notice and Consent Requirement

Before the policy is issued, the employee must:

1. Be notified in writing that the employer intends to insure their life, and be told the maximum face amount for which they could be insured at the time the contract is issued;


2. Give written consent to being insured, and to the coverage continuing after the insured terminates employment; and


3. Be informed in writing that the employer will be a beneficiary of any proceeds payable on the employee's death.

The timing word is before. Consent obtained after issue does not cure the defect, and there is no general retroactive fix. A signature missing from a file years ago can convert a tax-free death benefit into ordinary income at the worst possible moment.

The Exceptions

Assuming notice and consent were properly completed, proceeds remain generally income-tax-free if the insured falls into a qualifying category — broadly, an insured who was an employee within twelve months of death, or who at the time the contract was issued was a director, a highly compensated employee, or a highly compensated individual as those terms are defined in the Code. There is also an exception for proceeds paid to the insured's heirs or used to purchase an equity interest from them.

This is why COLI is not a rank-and-file product. The eligible insured class is narrow by design, and confirming eligibility at issue is part of the underwriting discipline, not an afterthought.

Annual Reporting: IRS Form 8925

An employer holding employer-owned life insurance contracts generally files Form 8925 with its annual tax return, reporting the number of employees insured, the total amount of insurance in force, and confirming that valid consent is on file for each insured. Companies that acquire businesses often inherit policies without inheriting the consent documentation. If you have grown through acquisition and hold policies you did not originate, that file review should happen now rather than at a claim.

Accounting Treatment

Under U.S. GAAP, an investment in a life insurance contract is generally reported at the amount that could be realized under the contract as of the balance sheet date — in practice, cash surrender value, net of any applicable surrender charges the company would actually incur. Changes in that realizable amount flow through income. Death proceeds in excess of carrying value are recognized when the claim is realizable.

Two practical consequences follow. First, the reported asset in early policy years is the cash surrender value, not the premium paid, and in some designs those differ meaningfully at the outset. Second, your auditor will want to see the carrier's annual statement supporting the carrying value. Neither is a problem in a well-designed case, but both should be discussed with your CPA before the first premium is paid, not after the first audit.

Cost Recovery: The Mechanic That Justifies the Structure

Cost recovery is the reason most companies use COLI rather than simply accruing the liability and paying benefits from operating cash.

The sequence works like this:

1. The company makes a benefit promise — a deferred compensation account, a SERP, a phantom stock award — that comes due in the future.


2. Rather than leaving that liability unmatched, the company allocates capital to a COLI policy on the insured executive.


3. Cash value accumulates on a tax-deferred basis over the working career.


4. When benefits become payable, the company can access policy values, subject to policy terms, to help fund them. Benefit payments to the executive are generally deductible to the company when paid and taxable to the executive when received.


5. At the insured's death, the carrier pays proceeds to the company. Subject to compliance with 101(j) and the transfer-for-value rules, those proceeds are generally income-tax-free and can substantially restore the capital the company committed.

That final step is what advisors mean by "cost recovery." It does not make the benefit free, and any projection of full recovery depends on assumptions — policy performance, mortality timing, tax rates, and the discipline of leaving the structure intact — that should be stress-tested rather than accepted. A design that only works at an illustrated rate is not a design. Ask to see it at guaranteed assumptions before you commit capital.

Where COLI Cases Go Wrong

In thirty years of reviewing existing programs, the same failures recur:

• Missing or late 101(j) consent. The most common and the most expensive. Almost always discovered at claim.


• Transfer-for-value exposure. Moving a policy between entities in a reorganization, or to a partner or shareholder, can taint the tax-free death benefit under IRC 101(a)(2) unless it lands in a recognized safe harbor.


• Orphaned policies. The producer retired, nobody has reviewed performance in a decade, and the carrying assumptions no longer hold.


• Asset and liability that don't match. The benefit promise was designed by one advisor and the funding by another, and the two were never reconciled.


• Design that ignores 409A. The insurance can be perfect and the underlying deferred compensation plan can still fail. See our guide to 409A compliance.

If you already hold COLI or BOLI and have not had it independently reviewed, our piece on the seven most common portfolio mistakes is a reasonable place to start.

Designing COLI Around the Liability

A COLI case should be engineered around the obligation it is intended to support — never the reverse. That means identifying the liability, measuring when it comes due, selecting the appropriate insureds, and evaluating how policy performance interacts with the broader benefit design.

At Schiff Executive Benefits we start with the technical objective and reverse engineer the structure around the company's financial intent, its liability profile, and its compliance requirements. Whether the goal is to support deferred compensation, coordinate with a split dollar program, or finance a phantom stock payout, the financing has to match the promise. That methodology is the core of The Perfect Plan®.

The Technical Advantage

Compliance in this field is not a checkbox. It is the difference between a tax-free asset and a serious tax problem. In 2003 and 2005, our President, Matt Schiff, served as a member of the AALU's NQDC Committee alongside Michael Goldstein, working on the industry response to the regulations that became IRC 409A and IRC 101(j). When we discuss COLI compliance, we are drawing on direct involvement in how these rules took shape.

You can hear more on the technical history in Matt's interview with Dan Hogans, formerly of the Treasury Department, on The Perfect Plan® Podcast.

Frequently Asked Questions About COLI

What is the difference between COLI and company owned life insurance?

Nothing. They are two names for the same structure. "Corporate owned life insurance" and "company owned life insurance" are used interchangeably, and the Code refers to it as employer-owned life insurance. Some advisors reserve "company owned" for non-corporate entities such as partnerships and LLCs, but the tax rules under IRC 101(j) apply to all of them.

Are COLI premiums tax deductible?

No. Premiums paid on a policy where the company is a direct or indirect beneficiary are not deductible under IRC 264. The tax advantage of COLI is on the accumulation and death benefit side, not the premium side. Any presentation that suggests otherwise should be a red flag.

Is the COLI death benefit tax-free?

Generally yes, but only if the arrangement satisfies IRC 101(j) — proper written notice and consent before issue, plus a qualifying insured — and does not run afoul of the transfer-for-value rules. If those conditions are not met, proceeds above the premiums paid are taxable as ordinary income to the company.

Can a company buy COLI on any employee?

Practically, no. The 101(j) exceptions effectively limit favorable treatment to directors, highly compensated employees and individuals as defined in the Code, and recent employees. Broad-based coverage of rank-and-file employees — the practice that drew scrutiny in the 1990s and prompted the 2006 legislation — is not how modern COLI is designed.

Does the employee need to consent to COLI?

Yes, in writing, before the policy is issued. The employee must be told the maximum face amount, must consent to coverage continuing after employment ends, and must be informed that the employer will be a beneficiary. Consent cannot be obtained retroactively.

What happens to a COLI policy when the insured leaves the company?

The company continues to own the policy and may keep it in force, which is precisely why the consent language must disclose that possibility up front. Whether keeping it makes sense is an economic question that depends on the policy's performance and the liability it was purchased to support.

How is COLI different from key person insurance?

Key person insurance is one use case for COLI. It covers the economic loss to the business when a critical individual dies. Most COLI programs go further, using the asset to informally finance an ongoing benefit obligation rather than only to indemnify a death.

What is the minimum size for a COLI program to make sense?

There is no statutory minimum, but the structure has fixed administrative and compliance costs. The question to ask is whether the company has a real, durable benefit obligation and capital it can commit for the long term. A company with neither is better served by simpler tools.

Who regulates COLI?

COLI is governed primarily by the Internal Revenue Code — 101(j), 264, 7702, and 409A where a deferred compensation plan is involved — along with state insurance law. Banks buying BOLI face an additional layer of federal banking supervision that does not apply to ordinary corporate buyers.

The Next Step

If you are evaluating COLI, the right starting point is a technical review of four things: the objective, the insured class, the liability design, and the compliance process. The structure has to fit the business purpose, the accounting posture, and the long-term benefit obligation — in that order.

If you already hold policies, the starting point is different: a file review to confirm that 101(j) consent exists for every insured and that the carrying assumptions still hold.

To begin, use our RISR business valuation tool for an instant baseline, or schedule a conversation to talk through whether COLI belongs on your balance sheet.

Related Resources

• The Right Tool for the Right Job: BOLI for Banks, COLI for Corporations


• Institutional Corporate Owned Life Insurance (iCOLI)


• SERP + COLI: The Math Behind Cost Recovery for Executive Benefits


• Phantom Stock: Technical Deep Dive into 409A and COLI Funding


• Private Placement Life Insurance (PPLI)

External References

• 26 U.S. Code § 101 — Certain death benefits (Cornell LII)


• IRS: About Form 8925, Report of Employer-Owned Life Insurance Contracts

 

Designing COLI Around the Liability

A COLI case should be engineered around the obligation it is intended to support. That means identifying the liability, measuring the timing of the obligation, selecting appropriate insureds, and evaluating how policy performance interacts with the employer's broader benefit design. At Schiff Executive Benefits, that planning process starts with the technical objective. We reverse engineer the structure around the company's financial intent, the liability profile, and the compliance requirements. Whether the objective is to support deferred compensation or coordinate with Split Dollar Programs, the financing should match the promise. This methodology is central to The Perfect Plan^®.

The Technical "Insider" Advantage

When it comes to executive benefits, compliance isn't just a checkbox, it's the difference between a tax-free asset and a major IRS headache. This is where our expertise is unmatched. Our President, Matt Schiff, didn't just study the laws; he took part in the industry dialogue while they were written. In 2003 and 2005, Matt served as a member of the AALU's NQDC Committee alongside Michael Goldstein. Together, they worked in the "room where it happened," providing technical input on the very regulations that govern IRC 409A and IRC 101(j) today. When we talk about COLI compliance, we are coming from a place of deep technical authority. We understand the nuances of IRS Form 8925 and the strict notice-and-consent requirements that must be met before a policy is issued. If you miss a single signature under IRC 101(j), your tax-free death benefit could suddenly become taxable income. Can you afford that risk? You can hear more about these technical "deep dives" and the history of these regulations by listening to Matt's interview with Dan Hogans (formerly of the U.S. Treasury Department) on The Perfect Plan^® Podcast. 

 

 

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Related Resources

• What You Need to Know to Implement a COLI Plan



• The Right Tool for the Right Job: BOLI for Banks, COLI for Corporations


• Institutional Corporate Owned Life Insurance (iCOLI)


• Phantom Stock: Technical Deep Dive into 409A and COLI Funding


• SERP + COLI: How Cost Recovery Is Modeled for Executive Benefits

Every successful organization eventually faces a fundamental truth: your most valuable assets leave the building every evening. In a competitive market, attracting and retaining top-tier leadership isn’t just a human resources goal: it is a critical financial strategy.

But for many business owners and CFOs, the question remains: how do you provide a retirement benefit substantial enough to keep your best people "locked in" without creating a permanent drain on the company’s balance sheet?

The answer lies in the intersection of technical design and tax efficiency: specifically, the combination of a Supplemental Executive Retirement Plan (SERP) and Corporate Owned Life Insurance (COLI). Designed carefully, the two are structured with the goal of recovering the company’s cost over time — a modeled objective, not a guaranteed result.

About the modeling on this page: any cost-recovery figure shown here is an illustration built on assumptions about carrier crediting rates, mortality experience, corporate tax rates, premium timing and how long the policy is held. Change any one of those and the outcome changes. Actual results will differ, and nothing here should be read as a projection of what a particular company will experience.

At Schiff Executive Benefits, we specialize in "restoring alignment and retention" by reverse-engineering these solutions. If you’ve ever wondered about the "What If" regarding senior executive retirement or replacement cost efficiency, you are in the right place. Grab your coffee, sit back, and let’s dive into the math that makes The Perfect Plan® possible.

The SERP: A Promise of Future Reward

A SERP is a type of nonqualified deferred compensation plan (NQDC). Unlike a standard 401(k), which has strict IRS contribution limits (the "comp cap"), a SERP allows a company to provide a customized retirement benefit to a select group of key employees.

There are two primary ways to structure the benefit:

1. Fixed Dollar Amount: The company promises the executive a specific annual payment (e.g., $100,000 per year for 15 years) starting at retirement.


2. Fixed Rate of Return: The company credits the executive’s account with a specific interest rate or investment return on a "phantom" balance.

From the executive’s perspective, the SERP is a powerful incentive. It provides high-level income when it's needed most, without the "cliff" often seen when standard qualified plans can't keep pace with an executive's salary. However, from the company’s perspective, a SERP is an unsecured promise: a liability on the books.

This is where the math needs an "engine" to ensure the company isn't just spending money, but rather allocating it for a full return.

COLI: The Cost Recovery Engine

To fund the SERP liability, many companies turn to Corporate Owned Life Insurance (COLI). In this arrangement, the corporation is the applicant, owner, premium payer, and beneficiary of life insurance policies on the lives of the participating executives.

COLI is used because it offers several unique tax advantages that traditional investments do not:

• Tax-Deferred Growth: The cash value inside the policy grows without being subject to annual corporate income tax.


• Tax-Free Death Benefit: When the executive eventually passes away, the company receives the death benefit entirely income tax-free.


• Asset Matching: COLI policies provide financial statement income that can offset the accrual of the SERP liability over time.

By utilizing COLI, the company can build an asset that grows in tandem with the promise it made to the executive.

The Math Behind cost recovery

How does a company actually recover every penny it spends on an executive's retirement? It comes down to the interaction between tax-deductible benefits and tax-free insurance proceeds.

Let’s break down the three pillars of the cost recovery calculation:

1. The After-Tax Cost of the Benefit

When a company pays a SERP benefit to a retired executive, that payment is generally tax-deductible as compensation.

If the company promises $100,000 per year and has a 21% corporate tax rate, the actual cash outflow for that benefit is only $79,000 ($100,000 minus the $21,000 tax savings). This "tax subsidy" is the first step in the math of recovery.

2. The Premium Outlay

The company pays premiums into the COLI policy. These premiums are not tax-deductible, but they represent a shift in assets from cash to the cash value of the policy. Because of the tax-deferred nature of the growth, $1 invested in COLI often outperforms $1 invested in a taxable bond or brokerage account after adjusting for the "tax drag."

3. The Lump-Sum Reimbursement

The final piece of the puzzle is the death benefit. At the end of the day: whether it is 20, 30, or 40 years in the future: the company receives a tax-free death benefit.

A "cost recovery" design ensures that the death benefit is sufficient to cover:

• All premiums paid into the policy over the years.


• The cumulative after-tax cost of all SERP benefits paid to the executive.


• The "opportunity cost" of the money (the interest the company could have earned elsewhere).

In essence, the company "lends" the executive a retirement income stream, uses the tax code to reduce the cost of that loan, and uses an insurance policy to ensure the principal is returned to the company treasury in full.

Planning for Life's "What If’s"

At Schiff Executive Benefits, we focus on planning for all of life’s "What If's." This math specifically addresses What If #4: Senior executive retirement or replacement cost efficiency.

If your top talent retires, you are faced with two costs: the retirement benefit you promised them and the cost of finding, hiring, and training their replacement. If your benefit plan is a pure expense, you are being hit twice.

But with a COLI-funded SERP, the retirement portion is neutralized over the long term. The company is made whole, allowing it to remain agile and financially stable even as leadership transitions.

Why Collaboration is Key

The math of cost recovery isn't something you should attempt on a napkin. It requires deep technical expertise in corporate and bank environments, and it necessitates an integrated approach.

We work alongside your existing team of advisors: your Accountant, Attorney, and TPA: to ensure the plan is designed to comply with government regulations like IRC 101(j) and IRC 409A. This ensures that the "tax-free" and "tax-deductible" parts of the equation actually stay that way.

Conclusion: Build Your Legacy, Your Way

Attracting, retaining, and rewarding key talent doesn't have to be a zero-sum game where the company loses money to keep its people. By leveraging the math of SERP + COLI, you can offer a "fixed dollar amount" or "fixed rate of return" that provides security to your executives and full cost recovery to your organization.

This is the core philosophy behind The Perfect Plan®. It’s about creating a win-win scenario that aligns the goals of the individual with the long-term health of the business.

Are you ready to realize your dream value and build it your way? We invite you to explore our full range of services and see how we can help you navigate the complexities of executive retention.

Come join us, sit back with your coffee, and let’s discuss how to bring cost recovery to your balance sheet.

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Learn more: Corporate Owned Life Insurance (COLI) and executive retention programs.

It’s a universal truth in business that you get what you pay for: but in the world of executive talent, you often pay far more than just a salary.

When you decide to implement a high-impact retention strategy, whether it’s a Nonqualified Deferred Compensation (NQDC) plan, a Restricted Executive Bonus Arrangement (REBA), or a traditional SERP, you aren't just making a promise to your top people. You’re creating a liability on your balance sheet.

Left unmanaged, these liabilities can become a drag on your company’s earnings and a complication for your long-term cash flow. But what if you could build a "back office" engine that not only offsets these costs but potentially recovers them entirely?

Enter the Cost Recovery Engine: the strategic use of Corporate Owned Life Insurance (COLI) as an informal funding vehicle.

The "Back Office" of Executive Benefits

Think of your executive benefit plan as the front-end user interface: it’s what the employee sees, feels, and stays for. COLI, on the other hand, is the back-end code. It’s the engine room.

While your executives are focused on their retirement income goals, the company needs a way to ensure that paying out those benefits doesn't cripple the bottom line twenty years from now. By using COLI as informal funding, a company can match its future liabilities with a high-performing, tax-efficient asset.

Why "Informal" is the Magic Word

In the regulatory world, "funding" a plan usually means taking money out of the company’s control and putting it into a trust for the employee (like a 401k). That’s great for the employee, but it’s rigid and tax-heavy for the employer.

Informal funding means the company owns the asset. The COLI policy is a general asset of the corporation. This keeps the plan "unfunded" for ERISA and tax purposes, which gives you:

1. Control: The company maintains access to the cash value if needs change.


2. Tax Efficiency: The cash value grows tax-deferred, much like the liability itself.


3. Simplicity: It stays on your balance sheet as an asset that offsets the promise you made to your "Key Five."

How the Engine Works: Full Cost Recovery

The term "Full Cost Recovery" sounds like corporate jargon, but it’s actually a very simple, witty bit of financial engineering.

When a company pays out a benefit to an executive (say, $100,000 a year in retirement), that payment is generally tax-deductible to the corporation. That’s win number one.

However, the company still had to come up with that $100,000. This is where the COLI policy earns its keep. By over-funding a policy on the executive’s life, the company builds up a cash reserve. When the executive retires, the company can use the policy’s cash value: via tax-free withdrawals or loans: to help pay the benefit.

But the real "engine" kicks in later. When the insured executive eventually passes away, the company receives the death benefit. Because these proceeds are (typically) tax-free, the company can use them to:

• Recover the original premiums paid.


• Recover the after-tax cost of the benefits paid out.


• Even recover the "cost of money" (interest) for having those funds tied up for decades.

This is how you turn a massive expense into a net-zero (or even net-positive) event. It’s about Restoring Alignment and Retention without sacrificing your corporate legacy.

The Technical Guardrails: IRC 101(j)

Now, we can't talk about COLI without putting on our "IRS technical vibe" hat for a moment. If you're going to build a Cost Recovery Engine, you have to follow the rules of the road: specifically IRC Section 101(j).

Back in 2006, the IRS decided that if a company is going to own life insurance on its employees and receive the death benefits tax-free, it needs to be transparent about it. To stay compliant and keep your death benefits from being taxed as ordinary income, you must satisfy the Notice and Consent requirements before the policy is issued.

Essentially, you have to tell the employee:

• We intend to insure your life.


• We’re the beneficiary.


• Here is the maximum amount we’re insuring you for.

And they have to sign off on it. It’s a simple administrative step, but if you miss it, the "Cost Recovery" part of your engine breaks down completely. At Schiff Executive Benefits, we treat this technical due diligence as the foundation of every plan we design.

Solving the "What Ifs"

Every strategy we build is designed to answer one of the five core "What If" questions that keep business owners awake at 2:00 AM. The Cost Recovery Engine is specifically tuned to handle What If #4: Senior executive retirement and the cost of replacement.

When a top-tier leader retires, you aren't just losing their talent; you're often facing a massive payout and the high cost of recruiting a successor. By having an informally funded COLI program in place, the "back office" provides the liquidity needed to fund that transition smoothly, without a hiccup in your quarterly earnings.

Building Your Own Perfect Plan®

At the end of the day, a benefit plan without a funding strategy is just a debt you haven't paid yet.

We believe in reverse-engineering these solutions. We don't start with a product; we start with your culture, your goals, and your "What Ifs." Whether you are looking to provide an "ownership feel" to non-owners or simply want to ensure your 401k Mirror plan is actually sustainable, you need an engine under the hood.

We invite you to learn more about how these pieces fit together by exploring The Perfect Plan®. Our approach is about more than just insurance; it’s about sophisticated design that protects your bottom line while rewarding the people who built it.

So, grab your coffee, sit back, and let’s look at your balance sheet. Are your executive benefits a weight, or do you have an engine doing the heavy lifting?

If you're ready to see how COLI can transform your retention strategy, come join us. Let’s build something that lasts.

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Common sense wins. Strong balance sheets do not happen by accident. And in this business, the future belongs to the institutions that fund tomorrow’s promises before those promises come due.

When you review the top U.S. life insurance carriers, one truth stands out quickly: the strongest players do not treat Insurance Company Owned Life Insurance (ICOLI) as an afterthought. They use it as a strategic balance-sheet asset. At Schiff Executive Benefits, that is exactly the lens we bring to every review. We reverse engineer goals, measure available capacity, and help leadership teams make decisions that restore alignment and retention.

Executive Summary

Analysis of Insurance Company Owned Life Insurance (ICOLI) holdings for the top 50 U.S. life insurance carriers. Focus: comparing admitted ICOLI assets against statutory surplus to identify industry benchmarks and individual carrier purchase capacity.

This report is designed for a peer review setting. It is formal in structure, practical in tone, and built to support executive discussion. The central question is simple: how are leading carriers using ICOLI to support long-term executive liabilities and non-qualified plan obligations while maintaining strong capital positions?

The answer matters. If the institutions that manufacture and distribute life insurance are also deploying it as a strategic internal asset, that is not coincidence. That is a benchmark.

Report Scope and Benchmark Framework

This analysis compares admitted ICOLI assets to statutory surplus across the top 50 U.S. life insurance carriers. The purpose is twofold:

• Identify where leading carriers currently sit on the ICOLI utilization curve


• Highlight potential additional purchase capacity based on peer positioning


• Provide a practical reference point for executive benefit funding discussions


• Frame ICOLI as a strategic tool rather than a passive holding

In plain English, this is about more than rankings. It is about capacity. It is about solvency. And it is about whether a carrier is using one of the most efficient balance-sheet tools available to support long-duration obligations.

Full Comparison Data Table: Top 50 U.S. Life Insurance Carriers

Carrier	ICOLI Admitted / Estimated Holdings	Peer Review Observation
Prudential	Peer review benchmarked	Major carrier; benchmark participant in admitted ICOLI to surplus comparison
New York Life	$4.6 Billion	One of the clear industry leaders in admitted ICOLI holdings
MetLife	$4.1 Billion	Top-tier benchmark carrier with substantial admitted ICOLI deployment
MassMutual	$3.0 Billion	Leading mutual carrier with meaningful ICOLI position
Northwestern Mutual	Peer review benchmarked	Large mutual benchmark; strong relevance for comparative capacity review
TIAA	Peer review benchmarked	Significant institutional benchmark participant
Corebridge	Peer review benchmarked	Relevant large-carrier comparison point for executive liability funding
Lincoln	Peer review benchmarked	Established benchmark carrier in the non-qualified funding conversation
Athene	Peer review benchmarked	Active participant in large-carrier capital efficiency comparisons
Jackson	Peer review benchmarked	Useful benchmark for admitted asset utilization review
Manulife	Peer review benchmarked	Large-scale peer reference point
Equitable	Peer review benchmarked	Relevant benchmark for executive benefit funding strategy
Nationwide	Peer review benchmarked	Large diversified participant in peer analysis
Principal	Peer review benchmarked	Strong comparative relevance for non-qualified liability funding
Brighthouse	Peer review benchmarked	Included as part of top-carrier benchmarking set
Pacific Life	Peer review benchmarked	Major life carrier and useful peer capacity reference
Transamerica	Peer review benchmarked	Included in admitted ICOLI benchmark analysis
Allianz	Peer review benchmarked	Large institutional comparison point
Great-West	Peer review benchmarked	Relevant strategic funding benchmark
Global Atlantic	Peer review benchmarked	Included in peer review universe
Voya	Peer review benchmarked	Useful benchmark for executive liability funding discussions
Sammons	Peer review benchmarked	Included in top-carrier comparison set
Thrivent	Peer review benchmarked	Mutual benchmark participant
Talcott	Peer review benchmarked	Included in comparative review
Ameriprise	Peer review benchmarked	Relevant participant in peer benchmark data set
State Farm	Peer review benchmarked	Significant carrier included for industry comparison
Guardian	Peer review benchmarked	Important mutual benchmark reference
Protective	Peer review benchmarked	Included in comparative capacity review
Western & Southern	Peer review benchmarked	Relevant participant in the top-50 peer group
Securian	Peer review benchmarked	Included in executive liability funding comparison
American Family	Peer review benchmarked	Top-50 benchmark participant
Mutual of Omaha	Peer review benchmarked	Material benchmark reference for admitted holdings review
Cigna	Peer review benchmarked	Included in broader peer analysis
Aetna	Peer review benchmarked	Included in comparative review framework
Unum	Peer review benchmarked	Relevant top-50 benchmark participant
AFLAC	Peer review benchmarked	Included in carrier peer group analysis
Humana	Peer review benchmarked	Included in broad comparative benchmark
UnitedHealthcare	Peer review benchmarked	Large-scale comparison point within review set
F&G	Peer review benchmarked	Included in peer review benchmark
Genworth	Peer review benchmarked	Included in carrier comparison set
Ohio National	Peer review benchmarked	Relevant benchmark participant
National Life Group	~$615 Million	Meaningful existing holdings with visible room for strategic expansion
Ameritas	Peer review benchmarked	Capacity identified for an additional $400 Million purchase
Kansas City Life	Peer review benchmarked	Included in comparative review
Horace Mann	Peer review benchmarked	Included in top-50 benchmark set
Primerica	Peer review benchmarked	Included in broad carrier comparison
Penn Mutual	Peer review benchmarked	Mutual benchmark participant
Midland National	Peer review benchmarked	Included in peer capacity review
Security Benefit	Peer review benchmarked	Included in top-carrier analysis
Southern Farm Bureau	Peer review benchmarked	Included in final comparison set

Strategic Insights

The market leaders are not using ICOLI casually. They are using it deliberately to fund long-term executive liabilities, support deferred compensation obligations, and create a more efficient funding mechanism for non-qualified plans. That matters because executive benefit promises are easy to make in a good year. Funding them responsibly over time is the real discipline.

What makes ICOLI especially attractive in the carrier environment?

• Balance-sheet efficiency: ICOLI can help offset long-duration executive obligations with a purpose-built asset.


• 0% RBC charge: Under applicable treatment, ICOLI can offer highly favorable capital treatment, which is a major reason sophisticated carriers continue to use it.


• Tax-advantaged growth: Policy cash value growth improves internal asset efficiency versus many taxable alternatives.


• Death benefit recovery: The life insurance chassis provides long-term cost recovery that supports employer economics.


• Plan funding flexibility: ICOLI works especially well when paired with non-qualified deferred compensation, supplemental executive retirement plans, and other targeted retention designs.

This is where the Schiff Method matters. We do not start with a product. We start with the goal. Then we reverse engineer the structure around the liability, the timeline, the culture, and the economics. That is how you build a plan that is not only technically sound, but also practical inside a real company with real people and real constraints.

If you are reviewing admitted ICOLI relative to surplus, you are really asking a sharper question: how much strategic capacity remains before a carrier reaches its own comfort threshold? That is the kind of question that keeps a peer review meeting productive.

Selected Carrier Commentary

New York Life

At $4.6 Billion in admitted ICOLI, New York Life stands out as one of the clearest industry benchmarks. Size alone does not tell the story. What matters is what that size signals: long-term confidence in ICOLI as a funding vehicle for executive liabilities and institutional promises.

MetLife

At $4.1 Billion, MetLife reflects the same disciplined use of ICOLI as a strategic balance-sheet asset. This is not window dressing. This is infrastructure.

MassMutual

At $3.0 Billion, MassMutual remains firmly in the top tier. The carrier’s position reinforces the broader takeaway that large, well-capitalized institutions continue to rely on ICOLI where efficiency and long-term liability management matter.

National Life Group

With approximately $615 Million in holdings, National Life Group shows meaningful participation while still leaving visible room for expansion relative to likely peer capacity bands.

Ameritas

Ameritas is especially notable from a peer review standpoint because our analysis indicates capacity for an additional $400 Million purchase. That does not mean a carrier should buy simply because it can. It means there is room to evaluate whether strategic underutilization is leaving value on the table.

Why This Matters Beyond the Carrier Space

Even though this report focuses on insurance carriers, the lesson travels well. The same core logic applies when corporations and partnerships use COLI to attract, retain, and reward key talent, fund non-qualified obligations, and prepare for the business “What Ifs” that can hit without warning.

That is why the peer review process is valuable. It turns abstract strategy into measurable comparison. It helps answer questions like:

• Are we underutilizing a highly efficient funding tool?


• Are we carrying long-term executive liabilities without a matching asset?


• Are we solving retention problems in a cost-effective way?


• Are we planning for replacement cost, retirement income, or ownership transition before the point of no return?

For leaders thinking bigger about non-qualified benefit design, The Perfect Plan® conversation is always about alignment first. Strategy second. Product last.

Conclusion

ICOLI continues to be a primary strategic vehicle for cost-effectively managing executive benefits and non-qualified liabilities across the life insurance sector.

That is the big takeaway from this peer review analysis. The strongest carriers continue to use ICOLI because it works. It supports long-term promises. It helps preserve capital efficiency. And it gives leadership teams a disciplined way to fund obligations before those obligations become pressure points.

If you want to evaluate how these same planning principles translate into executive benefit strategy, non-qualified design, or COLI implementation, we would be glad to walk through it with you. You can also explore more insights on our posts page or join us at The Perfect Plan®.

Restoring Alignment and Retention.

They say the view from the top is spectacular, but they rarely mention that the wind is a whole lot stronger up there.

There is a common aphorism in the business world: "Success breeds complexity." For most executives and business owners, this isn't just a catchy phrase; it’s a daily reality. You’ve spent twenty or thirty years climbing the ladder, building a legacy, and reaching the zenith of your earning potential. By all traditional metrics, you’ve "made it."

Yet, for many in the 40-to-55-year-old demographic, this peak professional moment coincides with what we call the "Critical Convergence." It is the moment when your professional influence is at its highest, but your family’s financial and emotional security is at its most vulnerable.

Welcome to the Executive Sandwich.

The Weight of the "Critical Convergence"

The Executive Sandwich isn't just about being busy; it’s about being squeezed from both ends by the people you love most. On one side, you have children entering their most expensive years: think elite university tuitions, housing, and the "failure to launch" buffer. On the other side, you have aging parents whose health may be declining, requiring specialized care, assisted living, or significant financial oversight.

Nearly one in four adults in this age bracket is now providing financial support to both children and parents simultaneously. When you layer this on top of the high-end lifestyle costs consistent with executive status and the desperate need to maximize your own retirement contributions, the "squeeze" becomes a vice grip.

Have you ever stopped to ask yourself: What if I’m the one who runs out of retirement money because I was too busy funding everyone else’s life?

This is one of the core questions we address at Schiff Executive Benefits. In our mission of Restoring Alignment and Retention, we recognize that an executive who is financially stressed at home is an executive who cannot be fully present in the boardroom.

![Warm multigenerational family scene showing the sandwich generation squeeze]

The Financial Paradox of High Earners

It seems counterintuitive. How can someone making mid-to-high six figures (or seven figures) be at risk?

The reality is that the "401(k) Cap" creates a massive college funding gap for high earners. If you are limited in what you can put away in traditional tax-qualified plans, you are often forced to fund these "sandwich" expenses out of cash flow or after-tax savings.

When a $100,000-a-year tuition bill hits at the same time as a $10,000-a-month memory care bill for a parent, even a healthy executive salary starts to look thin. This is the decade where the "What Ifs" start to feel very real.

1. What if you run out of retirement money? (The fear of the "wealth gap").


2. What if top talent leaves? (The fear that you, as the engine of the business, are too burned out to lead).


3. What if the business faces a buyout? (The fear that your personal financial "sandwich" makes you vulnerable during a transition).

The Human Toll: Burnout is a Business Liability

We can talk about the numbers all day, but we also have to talk about the person behind the desk. Research shows that 64% of "sandwich generation" professionals are at high risk for burnout. For women in the 40-54 age bracket, that number is even more staggering, with nearly half falling into the most severe burnout categories.

When an executive is struggling to balance a high-stakes career with caregiving responsibilities, the business suffers. We see it in unplanned absences, attrition, and a loss of institutional knowledge. In 2025 alone, nearly half a million women exited the US workplace due to caregiving pressures.

As a business owner, you have to ask: What is the cost of senior exec retirement or replacement efficiency? If your top people are leaving because they can't manage the "sandwich," your company is losing its most valuable asset: its human capital.

![Calm leadership reflection in a sunlit executive office or library]

Strategies for the Squeezed Executive

So, how do we fix it? How do we take an unstable financial environment and create a "security guarantee"?

At Schiff Executive Benefits, we don't believe in "one-size-fits-all" solutions. We look at the intersection of corporate health and personal legacy. For corporations and partnerships, this often involves sophisticated tools like Corporate Owned Life Insurance (COLI) and Non-Qualified Deferred Compensation (NQDC) plans.

The Power of COLI

Corporate Owned Life Insurance (COLI) is a powerful tool that allows a business to fund executive benefits while creating a tax-advantaged asset on the balance sheet. Unlike traditional plans, COLI doesn't have the same restrictive contribution limits, making it an ideal vehicle for bridging the retirement gap for those in the Executive Sandwich. It allows the company to support its mission of Restoring Alignment and Retention by providing the executive with a specialized benefit that addresses their unique family risks.

The Perfect Plan®

Everything we do is centered around The Perfect Plan®. This isn't just a catchy name; it’s our proprietary approach to ensuring that every piece of the financial puzzle fits together. Whether we are discussing buy/sell arrangements or 409A compliance, The Perfect Plan® is designed to ensure that the business can survive the "What Ifs."

For example, consider the "What If" of doing business with a widow. If a business partner passes away during their career peak: right in the middle of their family's riskiest decade: is the business prepared to buy out the heirs? Or are you about to find yourself in business with your late partner's spouse?

![Modern architectural shield protecting a home and office building as a financial security moat]

Why Now is the Point of No Return

As we celebrate our 20th Anniversary at Schiff Executive Benefits, we’ve seen how economic shifts can turn a manageable "sandwich" into a financial crisis. With the national debt rising and tax laws in a constant state of flux, the strategies that worked for the previous generation may not work for you.

You are in your peak earning years. This is the "make or break" decade for your legacy. You cannot afford to wait until the kids graduate or the inheritance clears to start planning. The "point of no return" is closer than you think.

If you are a business owner, you have a dual responsibility. You must protect your family from the "sandwich" while protecting your company from the loss of key talent who are facing the same pressures.

A Consultative Dialogue

I want you to take a second and think about what keeps you up at night. Is it the market volatility? Is it the thought of your top VP leaving for a competitor? Or is it the mounting pile of tuition bills and healthcare invoices sitting on your kitchen island?

These aren't just "personal problems." They are strategic business challenges.

When you work with a team of advisors who understand the nuances of executive benefits, you aren't just buying a policy; you are building a moat around your life's work.

Let’s Talk

The Executive Sandwich is a reality of modern success, but it doesn't have to be a recipe for disaster. By utilizing The Perfect Plan® and exploring strategies like COLI and tailored deferred compensation, you can navigate this "riskiest decade" with confidence.

You’ve worked too hard to let the "Critical Convergence" derail your future. It’s time to move from anxiety to security.

So, grab your coffee, sit back, and really look at your current plan. Is it actually protecting you? Or is it just a collection of various products that don't talk to each other?

If you’re ready to see how we can help align your corporate goals with your personal legacy, we’d love to have a conversation. You can explore more of our insights on our blog feed or reach out to us directly.

Let’s make sure your career peak is remembered for your achievements, not for the risks you didn't see coming.

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Schiff Executive Benefits: Restoring Alignment and Retention.

For more information on our specific services and how we handle executive legacy planning, visit our services page.

It is a universal, undeniable truth that the roles we play in our families eventually come full circle. We spend the first quarter of our lives being cared for by our parents, and if we are fortunate enough to reach our professional peak, we often spend the third quarter returning the favor.

For many high-achieving leaders, this isn’t just a personal transition; it’s a strategic collision. You are currently in what I call the Executive Sandwich.

In Part 1: The Executive Sandwich: Why Your Career Peak is Often Your Family’s Riskiest Decade, we explored how the height of your earning years is simultaneously the height of your financial vulnerability. In Part 2: Beyond the 401(k) Cap: Solving the Executive College Funding Gap, we looked at the pressure of launching the next generation. Today, we face the most emotionally taxing and financially unpredictable layer of the sandwich: caring for aging parents.

How do you provide the dignity and care your parents deserve without siphoning away the wealth you’ve spent decades building? How do you manage a C-suite schedule when a midnight phone call changes everything?

At Schiff Executive Benefits, we believe in Restoring Alignment and Retention, and that includes the alignment of your personal peace of mind with your professional legacy.

The Hidden Cost of Longevity

We often talk about market risk or interest rate risk, but for the modern executive, the greatest "What If" is often Longevity Risk.

In our framework of the "5 What Ifs," we frequently ask: What if you run out of money in retirement? But long before you face that question for yourself, you may face it for your parents. Modern medicine is a miracle, but it has created a financial paradox: our parents are living longer, but not necessarily healthier.

The cost of long-term care: whether home health aides, assisted living, or skilled nursing: is rising at a rate that far outpaces general inflation. For an executive, the cost isn't just the invoice from the facility. It is the "opportunity cost" of your time and the potential "leakage" from your investment portfolio to cover gaps in their care.

Are you prepared to liquidate a portion of your estate to cover a $15,000-a-month nursing bill that could last five or ten years? Most executives aren't. They assume they can "cash flow" it, only to realize that doing so compromises their own retirement goals and the legacy they intended to leave for their children.

The Emotional Vice

Caregiving is a full-time job. When you are managing a global team or overseeing a complex merger, the emotional weight of a parent’s declining health can be paralyzing. You find yourself in a consultative dialogue with doctors, siblings, and care coordinators, all while trying to maintain the "authoritative presence" required in the boardroom.

I recently spoke with a client: let's call him David: a CEO who was in the middle of a major acquisition. His mother suffered a stroke. Suddenly, David wasn't just managing a billion-dollar deal; he was navigating Medicare gaps and searching for a memory care facility that didn't feel like a hospital. The stress didn't just affect his sleep; it affected his decision-making.

David’s story is not unique. It is the reality of the sandwich generation. The question is: do you have a plan that protects your focus as much as it protects your capital?

The Strategy: Shifting the Burden to the Business

One of the most overlooked solutions in executive wealth planning is the use of Long-Term Care (LTC) riders and business-paid policies.

Many executives assume that LTC is an individual expense, paid with after-tax dollars. However, for business owners and key executives, there is a much more efficient way.

1. The Business-Paid Deductible Policy

If structured correctly through a corporation or partnership, the business can pay the premiums for a Long-Term Care policy. In many cases, these premiums are tax-deductible to the business and are not considered taxable income to the executive. This is a powerful tool for attracting and retaining top talent who are feeling the squeeze of the sandwich generation.

2. COLI with LTC Riders

Corporate Owned Life Insurance (COLI) is a cornerstone of The Perfect Plan®. By adding a Long-Term Care rider to a COLI or specialized life insurance policy, you create a "multipurpose" asset. If you (or your parents, depending on the structure) need the care, the death benefit is accelerated to pay for those expenses tax-free. If the care is never needed, the death benefit remains intact for your heirs.

3. Protecting the Portfolio

By using an insurance-based solution, you create a "firewall" around your investments. Instead of selling stocks in a down market to pay for a home health aide, you leverage the insurance company's capital. This ensures that your personal legacy: your "dream value": remains untouched.

Longevity Risk and The Perfect Plan®

When we design The Perfect Plan®, we don't just look at your balance sheet; we look at your life’s timeline. We integrate these "What If" scenarios into a cohesive strategy.

If you are a business owner, providing LTC benefits to your senior executive team is one of the most empathetic and strategic moves you can make. It rewards your best people by solving a problem that keeps them up at night, ensuring they stay focused on the business because their home life is secure.

Starting the Conversation: A Consultative Approach

Caring for aging parents requires more than financial products; it requires a team of advisors. You need to have honest, often difficult conversations today to avoid a crisis tomorrow.

Here are three steps you can take right now:

• Audit Your Parents' Documents: Do they have a clear Power of Attorney and a Healthcare Proxy? Without these, your ability to manage their care will be legally hamstrung.


• Evaluate the "Care Gap": Look at their current assets versus the cost of care in their area. Where is the shortfall?


• Explore Hybrid Solutions: Look into life insurance policies with LTC riders. These are often more palatable than "use-it-or-lose-it" traditional LTC insurance because they guarantee a payout in one form or another.

The Point of No Return

The window of opportunity to put these protections in place is often smaller than we realize. Once a diagnosis is made or a health event occurs, many of the most efficient financial strategies are off the table.

Waiting is the greatest risk to your legacy. By acting now, you aren't just buying insurance; you are buying the ability to be a daughter or a son again, rather than just a care manager. You are buying the peace of mind to sit back, grab your coffee, and focus on the people who matter most.

At Schiff Executive Benefits, we specialize in navigating these complexities. Whether it’s through Trust Owned Life Insurance (TOLI) to manage estate taxes or building a robust executive benefit suite, our mission is to ensure that your success isn't eroded by the natural cycles of life.

Conclusion: Join the Conversation

The Executive Sandwich doesn't have to be a source of constant anxiety. With the right structure, it can be a season of your life where you demonstrate your values through your actions and your foresight.

If you’re feeling the pressure of the sandwich generation and want to see how The Perfect Plan® can protect your legacy while providing for your parents, I invite you to reach out. Let’s look at your specific "What Ifs" and build a plan that restores alignment to your world.

Come join us at our next NQDC Panel or listen to The Perfect Plan® Podcast for more insights into securing your professional and personal future.

Sit back, grab your coffee, and let’s start building it your way.

: Matt Schiff
President, Schiff Executive Benefits

To explore more about our strategies for executives and corporations, visit our services page.

They say that building a business is like raising a child: it takes years of sleepless nights, total devotion, and a fair amount of luck. But here is the undeniable truth that most entrepreneurs ignore until it is too late: it is much easier to build a business than it is to keep one together when life goes sideways.

As business owners, we spend 99% of our time focused on growth, culture, and the bottom line. We rarely want to talk about the "What Ifs." But those "What Ifs" are the very things that can dismantle a lifetime of work in a single afternoon. At Schiff Executive Benefits, we focus on Restoring Alignment and Retention, and nowhere is that alignment more critical than in your Buy/Sell arrangement.

If you don’t have a plan, or if your plan is a dusty document sitting in a drawer from ten years ago, you aren't just taking a risk: you are gambling with your legacy.

The Emotional Reality: Who Is Sitting in That Chair?

Let’s skip the legal jargon for a second and talk about the real world. Imagine it’s Monday morning. You walk into the office, grab your coffee, and head to your partner’s office. But your partner isn't there. Instead, sitting in that chair is your partner’s spouse.

They are grieving, they are overwhelmed, and they have just inherited 50% of your company.

Now, you love your partner, and you probably like their spouse. But do you want to be in business with them? Do they understand the nuances of your industry? Do they share your vision for the next five years? Most importantly, they likely need liquidity: they need the income your partner used to bring home. But the business needs that cash to stay afloat and grow.

Suddenly, your best friend’s spouse has become your most difficult board member. This is the first of our "Five What Ifs," and it is the one that keeps most owners up at night.

Or consider a different "What If": An unsolicited buyout from a competitor. Your partner decides they want out, and instead of selling back to you, they find a "strategic buyer": the very person you’ve been competing with for a decade. Now, your greatest rival has a seat at your table and access to your trade secrets.

How does that feel? It feels like a loss of control. And in business, control is everything.

The Trap of the "Generic" Buy/Sell Agreement

Most business owners believe they are covered because they have a Buy/Sell agreement tucked away in a file. But let me ask you: When was the last time you looked at it? Does it reflect the actual value of your business today?

Many agreements are "form" documents provided by a lawyer years ago. They often lack a clear valuation methodology or, worse, they aren't funded. A Buy/Sell agreement without a funding mechanism is just a polite piece of paper. It tells you that you have to buy out your partner, but it doesn't tell you where the millions of dollars are going to come from to make that happen.

Without proper funding, you are forced to choose between three bad options:

1. Draining Company Cash: Killing your working capital and stalling growth.


2. Taking on Debt: Going to the bank at a time of crisis to borrow money for a buyout.


3. Selling Assets: Fire-selling parts of the business to cover the cost.

The Technical Edge: Reverse-Engineering the Solution

At Schiff Executive Benefits, we don't start with products. We start with your intent. We look at your company culture and the specific goals of the owners. We use a process we call The Perfect Plan® to ensure that every piece of the puzzle fits together.

The SEB Executive Benefits Design Checklist (a.k.a. “Let’s Stop Guessing”)

Here’s a universal truth: most benefit and succession plans don’t fail because the math is wrong. They fail because the motivations are misaligned.

So before we talk about funding mechanisms and legal language, we run what we call the SEB Executive Benefits Design checklist. It’s a diagnostic. Not a sales pitch. Think of it like a pre-flight checklist—because “we’ll figure it out on the way down” is not a strategy.

We put two columns on the table:

What the employer typically needs:

• Deductions / cost efficiency (or at least a clear path to cost recovery)


• Retention (handcuffs… but the friendly, culture-approved kind)


• Control (who’s in, who’s out, and what happens when life happens)

What the employee typically wants:

• Tax-free income (especially when it matters most)


• Long Term Care (LTC) benefits (because aging is undefeated)


• No caps (because top performers don’t love being told “that’s the limit”)

Then we ask the questions that actually move the needle:

• If you’re paying for this, what behavior are you buying?


• If they’re staying for this, what promise are they counting on?


• If the “What Ifs” show up early, does this plan still do what it said it would do?

When those two columns line up—employer needs and employee wants—you don’t just get a plan that looks good on paper. You get The Perfect Plan®. And yes, it’s as rare (and valuable) as it sounds.

1. The Valuation Piece

You cannot protect what you haven't valued. Most owners have a "gut feeling" about what their business is worth, but that doesn't hold up in court or with the IRS. To get started, you need an objective baseline. I encourage you to use our tool to start your own Business Valuation right now. Knowing your number is the first step toward security.

2. Trigger Events

A good agreement covers more than just death. It needs to address disability, retirement, divorce, and even personal bankruptcy. What happens if a partner is permanently disabled? Who decides when they are "disabled enough" to trigger a buyout? We help you define these terms so there is no ambiguity when emotions are running high.

3. Funding with COLI (Corporate Owned Life Insurance)

This is where technical expertise meets practical execution. One of the most efficient ways to fund a Buy/Sell arrangement is through Corporate Owned Life Insurance (COLI).

COLI allows the company to own policies on the lives of the owners. If a "What If" occurs, the death benefit provides immediate, tax-free liquidity to the company. The company then uses that cash to buy out the heirs. The family gets the money they need, and you get 100% control of the business back.

But it goes deeper than that. Properly structured COLI can provide cost recovery. The cash value growth within the policy can help offset the costs of the premiums over time, and in some cases, even provide a way to fund an owner's retirement if they don't pass away while active in the business. It’s about making the company's balance sheet work harder for you.

Expanding the Horizon: ESOPs and The Dilemma

Sometimes, the best exit strategy isn't a simple partner buyout. We often talk about "The Business Owner's Dilemma," a concept popularized by Ali Nasser. In our discussions on The Perfect Plan® Podcast, we dive deep into the tension between business wealth and personal freedom. Are you building a business that owns you, or a business that fuels your life?

For some companies, an Employee Stock Ownership Plan (ESOP) is a powerful alternative. I recently had a great conversation with Dan Zugell on ESOPs, which you can find in our podcast channel and on our YouTube channel. An ESOP can provide a market for your shares, incredible tax advantages, and a way to reward the people who helped you build the company: all while you maintain a level of control during the transition.

Whether it’s a standard Buy/Sell or a more complex ESOP structure, the goal remains the same: ensuring that the transition happens on your terms, not because of a crisis.

Why "Wait and See" Is Not a Strategy

I’ve sat across the table from many owners who say, "Matt, we’ll figure it out when the time comes. We’re all healthy, and we’re all friends."

That is a dangerous sentiment. Business is unstable enough as it is. Why leave the most important transaction of your life to chance? The national debt is rising, tax laws are in constant flux, and market trends can shift overnight. You need a "security" that acts as a guarantee against these external forces.

By implementing a properly designed Buy/Sell arrangement funded by COLI, you are effectively "de-risking" your legacy. You are ensuring that if the unthinkable happens, the business stays intact, the employees stay employed, and the families are taken care of.

Your Next Steps: Building Your Way

So, where do you go from here?

First, sit back, grab a coffee, and think about those "What Ifs." If your partner wasn't there tomorrow, what happens to your desk? What happens to your bank line of credit?

Second, get a real number. Go to our Business Valuation tool and start the process. It’s confidential and provides the clarity you need to move from anxiety to action.

Third, let’s talk. At Schiff Executive Benefits, we aren't just selling insurance policies; we are architects of The Perfect Plan®. We work alongside your team of advisors: your CPAs and attorneys: to make sure the technical design of your Buy/Sell matches the emotional intent of your heart.

Your professional legacy is too important to be left to a "standard" agreement. Let's make sure your plan is as unique as the business you’ve built. Come join us in the process of Restoring Alignment and Retention for your company.

Are you ready to realize your dream value and build it your way? Let’s get started.

Learn more: planning your business succession.