Thursday, June 30, 2022

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Financial Strategies

Boosting Return on Surplus Corporate Capital


President, AIF

Recent interest rate compression has left many in the C Suite scratching their heads on how to access reasonable rates of return for corporate held assets. These accounts may be earmarked for many reasons, some with short term goals and others with infinite time horizons. In many cases these reserves are necessary for Bonding Requirements or Capital Reserve thresholds. What they all have in common is lackluster interest rates.

Reserve assets usually have two very important characteristics – the first being complete and immediate liquidity and the second being a very low risk profile. Many CFOs are turning to Guaranteed Issue Corporate Owned Life Insurance to find more attractive growth. An annual transfer of corporate held assets into the cash value account of the insurance contract can show a 2 to 3 percent internal rate of return with no loss of principal and complete liquidity.

Additional benefits include tax deferred growth and Key Person death benefits. To learn more about COLI funding contact a qualified Business Solutions advisor.

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