Corporate- and Bank-Owned Life Insurance have proven to be a cost-efficient and effective means for companies and banks to offset rising employee benefit costs, such as supplemental executive retirement, deferred compensation programs, and post-retirement medical obligations - all of which constitute a major expense for most corporations and financial institutions.
Most employers look for tax-efficient ways to fund their employee benefit
programs. A common way to accomplish this objective is through COLI/BOLI
products. In a COLI/BOLI program, a corporation or bank purchases life insurance
on a group of key employees. The corporation/bank pays the premiums, owns the
cash value of the policies, and is the designated beneficiary. Each participant
employee must consent to the corporation/bank owning an insurance policy on his
or her life and must be notified about the maximum amount of coverage and the
beneficiary designation.
COLI/BOLI offers the following benefits to employers:
- COLI/BOLI can be used as a source of funds to help support deferred
compensation and
other post-retirement programs.
- BOLI can be a source of funds that potentially offers annual after-tax
returns that are higher
than the returns earned on bank
investments.
- Policy earnings may come from growth in the account value each year
and from life insurance
proceeds when an employee dies.
- Policy earnings are tax-deferred until accessed.
Prefer to speak to someone about corporate- and bank-owned life
insurance?
TALK TO A FINANCIAL PROFESSIONAL