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agreement between petitioner and AIG and amended and tailored the
COLI policies to petitioner.
Policy face amounts varied with the age of each insured.
Generally, petitioner's death benefits were governed by policy
Option A, which provided for benefits based on the larger of the
face amount plus the account value on the date of death, or the
account value on the date of death multiplied by a specified
percentage based on the age of the insured.29 The applicable
mortality table was the 1980 Commissioners Standard Ordinary
Mortality Table B, Age Last Birthday, referred to as the CSO-B
table. Under the terms of the policies, death benefits from a
policy would first be used to reduce any outstanding loan.
Under the terms of the policies, petitioner could withdraw
part of the cash value of each COLI policy. However, a
withdrawal could not exceed the "net cash value"30 of the policy.
The policies also permitted petitioner to borrow an amount
that, with interest to the next policy anniversary, would not
29Some of the death benefits were paid under Option B, which
was calculated to include the account value in the face amount,
and the insurance proceeds were determined to be the larger of
the face amount on the date of death, or the account value on the
date of death multiplied by a specified percentage.
30The net cash value of the policy was defined as the cash
value less any prior withdrawals and any policy debt. The cash
value was defined as the greater of the Guaranteed Cash Value, or
the Account Value less the surrender charge that applies. The
Guaranteed Cash Value was determined by a Table of Guaranteed
Values provided with the policy.
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