Wrapping your current equity funds in ICOLI can increase your yield.
Insurance company owned life insurance (ICOLI) is an investment strategy that insurance companies commonly use to wrap their on-balance sheet investments. Wrapping investments – often the same investments they already hold – in ICOLI makes the investment gains tax-free, allows for tax free rebalancing and reduces the associated risk-based capital charges. The result is more yield and more efficient use of investment capital.
Three ways to improve yield on assets with ICOLI:
- Tax advantages of ICOLI. Simply wrapping your existing equity fund produces an annual yield enhancement of up to +150 bps.
- Rebalancing is not a taxable event. Some products have hundreds of funds to choose from. No more holding an asset just because of tax consequences.
- Less capital reserving enables you to make a more efficient use of your invested capital.
If you would like to explore how ICOLI yield enhancement can affect your company’s portfolio return, please reach out or schedule a call via this link.
Erik Speed
Associate Principal
(818) 292-7206
Erik.Speed@mbsfin.com
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Through a powerful combination of independence and experience, Mullin Barens Sanford Financial and Insurance Services (MBS Financial) is a leading consulting firm that assists companies with 409A and other executive benefit needs.
Disclaimer:
Variable Universal Life insurance combines the protection and tax advantages of life insurance with the investment potential of a comprehensive selection of variable investment options. The insurance component provides death benefit coverage and the variable component gives you the flexibility to potentially increase the policy’s cash value.
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