alternative funding for
executive compensation
bank owned
life insurance
A form of life insurance purchased by banks where the bank is the owner and beneficiary of the policy.
Bank Owned Life Insurance (BOLI) is an allowable transaction under the BOLI Interagency Statements on the purchase and risk management Of life insurance, and its business purpose is defined as financing employee benefit liabilities/costs. A BOLI policy’s initial cash value is 100% of the premium paid. Inside build-up of the policy’s cash value is tax-deferred and death benefit proceeds are received tax-free.
COMMON MISCONCEPTIONS
- A BOLI plan must include all bank officers on a non-discriminatory basis
- If a life insurance carrier is more highly rated, it must offer banks lower interest rates
- All BOLI carriers offer generally similar BOLI products and investment portfolios
- BOLI is an illiquid asset that the bank cannot get rid of
- All BOLI producer groups provide the same level of service and support
BOLI BENEFITS
BOLI enables banks to generate tax-advantaged income to offset and recover the costs of employee benefit plans, including healthcare, group term life insurance, retirement benefits, deferred compensation, and more.
It generates stable revenue from non-loan sources and enhances the Other Non-Interest Income component of the income statement. BOLI also provides competitive returns with superior credit quality and increases earnings per share (EPS) and shareholder value.
In today’s marketplace, BOLI policies are designed to reduce the policy owner’s interest rate and mark-to-market risk allowing for steady policy growth. Beyond that, BOLI allows the bank to share a portion of the returns with key executives, allowing for competitive recruitment and retention.
Newcleus’ full-range of BOLI services (included at no additional charge)
- Social Security Sweeps*
- Peer Group Analysis
- Concentration and Lending Limit Analysis
- Review of Carrier Financials
- Review of Carrier Ratings
- Comparative Carrier Analysis
- BOLI Insurance Policies
- Employee Consent Forms
- Carrier Anual Reports
- Carrier Statements
- Trust Documents
- Plan Legal Agreements
- Plan Forms, Such As Beneficiary Designations and Election Forms
- Carrier Ratings and Financials
- Carrier and Insurance News
- Industry and Market Compliance Issues
knowledge center
View all
Newcleus Completes its Combination and Rebranding Strategies
Newcleus Completes its Combination and Rebranding Strategies NEWTOWN, Pa., Dec. 1, 2020 – Newcleus, LLC (“Newcleus”) has completed its brand […]
2020Q3 Newcleus BOLI Index
NEWCLEUS BOLI INDEX The Newcleus Bank Owned Life Insurance Index (NBI) is intended to offer the user a “snapshot” of […]
2020Q2 STREAM Report
2020Q2 STREAM Report Welcome to our 2020Q2 STREAM Report – NEWCLEUS EXPANDS ITS CLIENT SERVICING AND SUPPORT WITH HIRE OF […]