Smart Financing Alternatives

Banks need to offset the rapidly rising costs of a broad-based benefits program, but still deliver income. One way to do that is by informally funding the executive benefits plan with a tax-advantaged bank-owned life insurance (BOLI) asset.

BOLI is a life insurance policy you can buy to insure the lives of your key employees. As the policy's beneficiary, your bank gets unique benefits, including the ability to:

  • Insure the economic loss of a key employee’s premature death
  • Offset the ever-increasing costs of employee health and welfare ERISA plans
  • Provide cost recovery for pre- and post-retirement executive compensation and benefit plans
  • Have an asset with a value highly correlated to the changing value of a liability obligation, i.e., a "hedge"

These benefits are a direct result of the fact that BOLI offers:

  • An asset value that accumulates on a tax-deferred basis, treating the change as "other non-interest income"
  • Income-tax-free death proceeds for recovering the present and long-term costs of employee benefits and compensation plans
  • A more efficient method of financing employee benefit and compensation plans than alternatives

Our unique BOLI service model will help you understand every aspect of the transaction and plan design. We'll also help you implement, monitor and maintain those assets in line with the most current regulatory and compliance requirements.

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