Overview
Corporate-Owned Life Insurance (COLI) is already a $3+ trillion market. The Life Bond structure enhances traditional COLI by securitizing the predictable mortality cash flows from key-person policies, converting them into immediate working capital, acquisition funding, or balance sheet optimization — all while maintaining full IRC §101(j) compliance for tax-free death benefit treatment.
How It Works
Corporation identifies key persons (executives, directors, highly compensated employees) per IRC §101(j)
Written notice and consent obtained BEFORE policy issuance (mandatory compliance requirement)
COLI policies originated with corporation as owner and beneficiary
Policies assigned to irrevocable trust; premiums funded from corporate cash flow or bond proceeds
Life Bonds issued against the pool's actuarial NPV
Bond proceeds deployed for corporate purposes: M&A, R&D, debt refinancing, pension funding
Tax-free death benefits service bond obligations upon insured's death
Key Benefits
Balance Sheet Optimization
Convert illiquid COLI assets into immediate capital without policy surrender
Tax Efficiency
Death benefits remain tax-free under IRC §101(j) if fully compliant
Key-Person Risk Management
Provides both insurance protection and liquidity simultaneously
Established Framework
COLI is a well-understood structure with decades of regulatory precedent
Target Participants
Fortune 500 corporations, mid-market companies, private equity portfolio companies
Estimated Scale
$100M – $10B face value pool per corporate client
Regulatory Considerations
Strict IRC §101(j) compliance required: written notice and consent BEFORE policy issuance. Only qualifying exceptions (key-person, director, highly compensated) eligible. Non-compliance makes death benefits fully taxable.
Full Presentation & White Paper
The complete Corporate Finance use case presentation and white paper contain detailed financial models, regulatory analysis, and implementation roadmaps. Access requires written permission.
DISCLAIMER: This use case is purely conceptual. COLI compliance is complex and requires specialized tax and insurance counsel. Non-compliance with IRC §101(j) results in fully taxable death benefits.