If anyone says Life Insurance is a bad investment, it will show abundantly how misinformed they are. This will include anyone you’ve heard on the radio or seen on TV. Have them research “Bank Owned Life Insurance” Also known as BOLI. In fact, if you Google: What is Bank Owned Life Insurance? You’ll learn quite a bit.

We know Banks use and employ many strategies to build and preserve their assets. Many are unaware of how they do it behind the scenes. Here’s ONE example that YOU the consumer may implement also.

Here’s a small overview of Bank Owned Life Insurance

Banks, credit unions, and corporate clients require a level of planning that will help them balance their assets while attracting, retaining, and rewarding top‐tier talent to contribute to growth and profitability. Finding the right balance is critical, and with firsthand knowledge of the most current products and product costs.

Bank Owned Life Insurance (BOLI) and Corporate Owned Life Insurance (COLI) plans are generally described as life insurance that a bank or corporation owns or has interest in. BOLI and COLI plans are used by financial institutions and companies to offset either a specific executive benefit plan (i.e. a split dollar plan or SERP) or to fund all employee benefit plans in aggregate. For either purpose, life insurance when held to maturity offers the most efficient way to fund these liabilities as BOLI provides an attractive tax‐equivalent yield to help offset the ever‐rising costs of employee benefits.

BOLI is the most popular funding tool utilized by banks to fund employee benefit plans, with more than half of the financial institutions in the country owning BOLI on their balance sheets. It is not uncommon for banks to invest 10% ‐ 25% of their Tier 1 Capital in BOLI. BOLI is a permissible asset under OCC Bulletin 2004‐56. This Bulletin provides extensive pre-purchase and post-purchase guidance to mitigate risks associated with this purchase.

While BOLI is an effective financing tool to offset employee benefit costs and provides incremental income to a bank’s bottom line, it also can also provide benefits to retain and reward key executives and directors. For example, the death proceeds from the life insurance can be shared with executives to designate to their own beneficiaries, thereby giving a significant benefit to executives.

So the next time someone says “Life Insurance is a bad investment.” Tell them they have no idea what they’re talking about. Life Insurance as a retirement vehicle is also available for consumers like YOU desiring a Non-Taxed option that carries a HIGHER annual cap when compared to a Roth, IRA, 401k, 403b, etc…To see how this might work for your specific situation. Contact one of our advisors at 916-238-8282

Discover how to implement a Life Insurance Retirement Plan in your personal life.

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