Most employers look for tax-efficient ways to fund their employee benefit programs. A common way to accomplish this objective is through BOLI or COLI products. In a BOLI or COLI program, a bank or corporation purchases life insurance on a group of key employees. The bank or corporation pays the policy premiums, owns the cash value of the policies, and is the designated beneficiary. The bank or corporation must obtain each employee’s consent prior to purchasing an insurance policy insuring his or her life, and the employee must be notified about the beneficiary designation and the maximum amount of insurance coverage under the policy on his or her life.
BOLI and COLI offers the following benefits to employers:
– BOLI or COLI can be used to help fund and support deferred compensation and other post-retirement programs.
– BOLI can potentially offer annual after-tax returns that are higher than the returns earned on bank investments.
– A bank’s earnings derived from BOLI policies may come from growth in the account value each year or from life insurance benefits generally payable on an income tax-free basis upon an insured’s death.
– The growth in a policy’s cash value is tax-deferred until accessed via a partial-withdrawal or surrender, if permitted under the terms of the policy.
Prefer to speak to someone about corporate- and bank-owned life insurance?
Insurance products issued by Massachusetts Mutual Life Insurance Company (MassMutual), 1295 State Street, Springfield, MA 01111-0001 and its subsidiaries C.M. Life Insurance Company and MML Bay State Life Insurance Company, 100 Bright Meadow Boulevard, Enfield, CT 06082.