PLANADVISER - January/February 2020 - 23

Why COLI?
Why MassMutual?
Interview with Mark Laramee
Managing Director of COLI Sales, Institutional Solutions
Published in February 2020 | Sponsored by MassMutual®
EMPLOYEE BENEFITS, from health care to 401(k) plans, are
always an important part of a growing organization's talent acquisition
and workforce management strategy, and this is particularly
true during times of low unemployment. Today, the competition
for talent is especially strong at the level of senior management
and the executive suite, putting an emphasis on ancillary benefits
such as nonqualified deferred compensation (NQDC) plans and
specialty insurance.
To help advisers get up to speed on these important benefits,
PLANADVISER spoke with Mark Laramee, Managing Director of
Corporate Owned Life Insurance Sales, Institutional Solutions, at
MassMutual. He detailed the way corporate-owned life insurance,
or COLI, may be used by companies to informally fund and even
offset their rising employee benefit costs-including those tied to
key executives and managers.
PLANADVISER: Why should the retirement planning audience
learn more about COLI and the role it can play in funding employee
benefit programs?
Mark Laramee: COLI is, to put it simply, a very tax-efficient vehicle
for employers to use to help fund and offset their rising employee
benefit costs. With today's low unemployment rate, particularly at
the level of senior management and the executive suite, employers
have to consider adding supplementary benefits to effectively
attract and help retain top talent. The low unemployment rate
among senior managers and executives puts an emphasis on such
benefits as nonqualified deferred compensation plans (NQDC), an
important addition to any exceptional benefits package. NQDCs
can help highly compensated employees [HCEs] mitigate their
income taxes, and can be funded tax-efficiently with COLI. Participants
don't pay federal income taxes on that portion of their
compensation in the year of deferral. In many plans, employees
are entitled to the value of their contributions plus any investment
growth. COLI provides a tax-efficient funding vehicle because
earnings within the policy generally grow tax-deferred.
Employers find COLI attractive because properly structured life
insurance can help employers manage the business risks associated
with the death of highly compensated key employees, at the same
time it has a neutral effect on their balance sheet. The long-term
policy proceeds may be used to fund various employee benefit
programs that a company may not otherwise be able to offer.
PA: How can advisers begin to incorporate expertise about COLI
and nonqualified deferred compensation into their practice?
Laramee: To get
started,
advisers should
collaborate with
specialists and third party administrators in the COLI marketplace;
it is a nuanced space and requires specialized knowledge.
At MassMutual Life Insurance Company (MassMutual), we are
committed to the COLI marketplace. With over $6 billion in COLI
assets in force1
, we have been providing institutions life insurance
solutions for 31+ years. It has been extremely gratifying to see
the positive reaction of the marketplace, including our peer
SPONSORED SECTION
competitors-they know that when MassMutual moves into a
marketplace, we are committing for the long haul.
One of the most important things for advisers to consider,
when utilizing COLI is the importance of selecting a carrier/
manufacturer that will be in this business long term, our high
financial strength can help ensure that. At MassMutual, we have
followed a prudent strategy for more than 168 years and our
continued financial strength supports the value of our products
and services. Financial strength ratings are a key indicator of a
company's ability to meet its financial obligations. We're proud to
have financial strength ratings among the highest of any company
in any industry.2
PA: Why does MassMutual excel in the COLI marketplace?
Laramee: We're involved in studying and solving the most complicated
financial needs of employers and individuals and live up to a
customer-centric service model. We're also making a tremendous
investment in technology to improve the employee benefit
experience, at the adviser level and at the client level.
PA: Tell us more about the benefits to the employer that come
from offering tax-efficient ancillary benefits such as nonqualified
deferred compensation plans.
Laramee: It's all about the employee evolution-recruit, reward,
retain, restore and retire. If employers aren't offering attractive
benefit programs, their employees may go out and find other
companies that are. Just as important, deferred compensation
plans can help answer the question,
'How do we help our top
talent prepare for and enter the retirement phase in an orderly
fashion?' Senior leaders are often the most expensive individuals
on the balance sheet, from a benefits perspective as well as from
a compensation perspective. Efficiently funded deferred compensation
plans can help employers skillfully manage turnover at the
highest level of the organization. l
1. As of March 31, 2019
2. Financial strength ratings are as of January 15, 2020: A.M. Best Company:
A++ (Superior; top category of 15); Fitch: AA+ (Very Strong; second category
of 21); Moody's: Aa3 (High Quality, fourth category of 21); Standard & Poor's:
(Very Strong, second category of 21). Ratings are for MassMutual (Springfield,
MA 01111-0001) and its subsidiaries, C.M. Life Insurance Company and MML
Bay State Life Insurance Company (Enfield, CT 06082). Ratings are subject to
change. Financial strength ratings do not apply to the separate account or the
variable investment choices offered under a variable universal life insurance
policy, nor do they imply any promise of investment performance.
The information provided is not written or intended as specific tax or legal
advice. MassMutual, its subsidiaries, employees and representatives are not
authorized to give tax or legal advice. Individuals are encouraged to seek
advice from their own tax or legal counsel.
Insurance products issued by Massachusetts Mutual Life Insurance Company
(MassMutual), Springfield, MA 01111-0001.
CRN202201-258599.
PLANADVISER - January/February 2020

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