Wednesday, April 27, 2022

All in the Family – Introducing Family-Owned Life Insurance (aka FOLI)

Estate planningFamily-Owned Life Insurance™ (FOLI) is a new planning tool that refers to the specialty use of private placement life insurance policies for family offices, which is closely related to the concept of Corporate Owned Life Insurance (COLI), Bank Owned Life Insurance (BOLI), and Insurance Only Life Insurance (IOLI). 

FOLI allows a family office to utilize investment capital on an income and estate tax-free basis and is not dictated by the size of the family, health status, or longevity of the patriarch and matriarch. As an added bonus, the policy can be quickly issued because there is no need for medical underwriting and unlike COLI, BOLI, and IOLI, IRC Sec 101(j) is not applicable. Some critics say that the strategy is not long-lasting, however, large corporations and banks have been utilizing COLI, BOLI, and IOLI for at least 50 years. 

Most ultra-high net worth families do not require additional life insurance for estate liquidity planning purposes and are looking for a tool where they can invest and grow on an income and estate tax-free basis for generations to come. FOLI is a variable universal life policy that can be issued with full underwriting, simplified underwriting, and guaranteed issue underwriting with the mortality risk reinsured by investment-grade reinsurers. Like all PPLI policies, investment options are customizable.

For more information:

See Gerald R. Nowotny, “All in the Family – Introducing Family-Owned Life Insurance™ (aka FOLI)“, Law Office of Gerald R. Nowotny, April 15, 2022. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

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