Sustaining Business Newsletter

One Proven Way to Control the Cost of Employee Benefits
By Jennifer S. Hendrickson

Corporate Owned Life Insurance (COLI) and Bank Owned Life Insurance (BOLI) are excellent ways to finance the ever-increasing cost of employee benefits.  They are investments that can offset the current and future costs of pre- and post-retirement medical coverage, group life, retirement and many other benefits offered to your employees. In addition, COLI/BOLI is a highly effective financing tool and offers a higher after-tax yield than most other investments. This is an effective asset that helps diversify your business portfolio and enhances the balance sheet. 

Here is how it works:
The business purchases life insurance on a select group of key employees.  The company owns the policies, pays all premiums and is the beneficiary of the insurance proceeds. Some businesses may choose to share a portion of these proceeds with plan participants as an extra benefit to their loved ones; but it is not required.  During the life of the policy, the growth of the cash surrender value is tax-deferred. Upon mortality, the death proceeds are received tax-free. This combination of economic benefits makes COLI/BOLI an excellent tool to offset a variety of existing or new benefit costs. There is no cost to the employees, and for larger plans there typically is no medical underwriting. Hendrickson Business Advisors partners with one of the premier executive benefit firms in the United States to design executive benefit plans for businesses. 

To learn more, contact us to determine (at no cost) if COLI/BOLI is right for your business or bank.