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Insurance company-owned life insurance, often abbreviated as ICOLI, is a type of life insurance arrangement where the insurance company is the purchaser, beneficiary and owner of life insurance policies placed on key executives. When it comes to addressing immediate and future financial obligations, ICOLI is a means to leverage and maximize a company’s overall financial position. Insurance companies are always on the lookout for investments that focus on generating improved earnings, surplus and financial strength.
ICOLI is a viable alternative asset and can offer multiple benefits for insurance companies, whether a life and health or property and casualty provider. Investing in an insurance company-owned life insurance policy has the potential to provide many solutions. The money earnings from ICOLI depend upon a diversified investment portfolio managed by either the insurance company or the insurance company’s outside investment advisor. The benefits of insurance company-owned life insurance include:
In summary, ICOLI offers the purchasing insurer multiple benefits besides being a key person enterprise risk management tool or offset to (and cost recovery against) employee benefit and compensation programs:
NFP’s relationships with the universe of ICOLI issuing carriers gives prospective clients access to in-depth analysis of product choice, design, costs, asset optimization and the supporting due diligence needed for the successful implementation of an ICOLI program. After initial design and implementation, NFP provides best-in-class administrative services, and necessary accounting and regulatory reporting. The long-term nature of an ICOLI purchase means working with a steady company with deep infrastructure, as NFP maintains, is critically important for long-term success as future obligations and risks associated with the enterprise and employees continue to evolve.