House Revives COLI Bill

A similar COLI bill was passed by the Senate Finance Committee in February 2004, as part of a larger bill that was never signed into law.

The new bill has strong support from the American Council of Life Insurers, Washington; the Association for Advanced Life Underwriting, Falls Church, Va.; and the National Association of Insurance and Financial Advisors, Falls Church.

The bill draws heavily on recommendations that life insurance industry groups developed in response to fears that some members of Congress were moving to shut down sales of the highly profitable product.

Sale of COLI has been under fire for several years. Consumer groups and some members of Congress have complained about reports of large companies taking out blanket life insurance policies on their employees without notifying the employees or allowing the employees to share in the proceeds.

ACLI President Frank Keating is emphasizing that H.R. 2251 enjoys the same strong, bipartisan support that the 2004 Senate COLI bill enjoyed, and NAIFA Chief Executive David Woods and AALU President Roger Sutton also are giving H.R. 2251 good reviews.

"The legislation would ensure the continued viability of COLI as a business-planning tool," Woods says.

In addition to looking out for employers and maintaining the viability of COLI, "the bill's sponsors and cosponsors got it right in setting standards for employee consent," Sutton says.