HUB Financial Services

Executive Benefits & BOLI


HUB Executive Benefits partners with clients to provide the expertise and oversight for all their executive benefits and life insurance needs and services. Our core services include

  • Executive benefit plan consulting and Diagnostic Reviews
  • Nonqualified Deferred Compensation Plan design and implementation
  • Financial and funding analysis/benefit security evaluation
  • Nonqualified plan oversight and accountability and total program outsourcing for the plan sponsor
  • Wealth Transfer Strategies
  • Life and Disability Insurance Oversight

Bank Owned Life (BOLI)

Bank-Owned Life Insurance (BOLI) is a type of life insurance purchased by banks on the lives of their key employees. The bank is both the policy owner and the beneficiary of these insurance policies. In the event of an employee’s death, the bank receives the death benefit payout from the insurance policy. HUB is expert at helping banks navigate the BOLI exploration and implementation process as well as providing oversight and accountability to ensure our clients can optimize the BOLI program

Here’s how it generally works:

  1. Policy Ownership: The bank purchases life insurance policies on the lives of certain key employees. These employees are usually high-ranking executives or individuals with critical skills and knowledge that are essential to the bank’s operations.
  2. Premium Payments: The bank pays the premiums for these life insurance policies. The amount of the premium depends on the policy’s coverage and the insured employee’s age, health, and other factors.
  3. Cash Value Accumulation: BOLI policies often have a cash value component, similar to other types of permanent life insurance policies. The cash value grows over time on a tax-deferred basis. The bank can access this cash value under certain circumstances, such as funding employee benefits or paying for the policy’s premiums.
  4. Death Benefit: When an insured employee passes away, the bank receives the death benefit payout from the insurance policy. The death benefit is typically tax-free and can be a substantial amount, depending on the policy’s face value and the insured employee’s age at the time of death.

The main reasons banks invest in BOLI are:

  1. Informal Funding of Employee Benefits: Banks use the cash value accumulation in BOLI policies to informally fund employee benefits, such as retirement plans and supplemental executive benefits.
  2. Tax Advantages: BOLI policies offer tax benefits, such as tax-deferred growth of the cash value and tax-free death benefit payout.
  3. Risk Management: Banks can mitigate the financial risk associated with the loss of key employees by using BOLI to cover the costs of recruiting, training, and compensating for the loss.
  4. Investment Return: BOLI returns are typically very attractive versus other bank eligible investments and can provide important diversification versus fixed income since fixed rate BOLI returns do not drop when interest rates rise.

Credit Union Owned Life (CUOLI)

Credit Union-Owned Life Insurance (CUOLI) is a type of life insurance that credit unions purchase to provide financial benefits and protections for their organizations. It is a unique form of life insurance that allows credit unions to utilize their surplus funds or reserves to create tax-advantaged benefits. HUB is expert at helping credit unions navigate the CUOLI exploration and implementation process as well as providing oversight and accountability to ensure our clients can optimize the CUOLI program

Here’s how Credit Union-Owned Life Insurance typically works:

  1. Policy Ownership: The credit union is the owner and beneficiary of the life insurance policy. This means that the credit union pays the premiums and retains the rights to the policy’s cash value and death benefit.
  2. Insured Individuals: The credit union selects certain individuals within the organization to be insured under the policy. These individuals are often high-ranking executives or key employees whose loss could significantly impact the credit union’s operations.
  3. Premium Payments: The credit union pays the premiums on behalf of the insured individuals. The premiums can be a one-time lump sum or regular payments over time.
  4. Cash Value Accumulation: Like other permanent life insurance policies, CUOLI policies often have a cash value component that accumulates over time. The cash value grows tax-deferred and can be accessed by the credit union, subject to certain conditions and tax implications.
  5. Death Benefit: If an insured individual covered under the CUOLI policy passes away, the credit union receives the death benefit from the insurance company. This payout can help the credit union cover costs associated with the loss of the key employee and any potential business disruptions.

Benefits of Credit Union-Owned Life Insurance:

  1. Tax Advantages: One of the main benefits of CUOLI is the tax advantages it offers. The cash value growth is tax-deferred, and if structured correctly, the death benefit can be received income-tax-free.
  2. Asset Protection: Credit unions can use CUOLI as a way to safeguard their financial stability in the event of the loss of a key employee or executive.
  3. Funding Employee Benefits: The cash value of the policy can also be used to fund employee benefits or other corporate expenses, providing an additional financial tool for the credit union.

It’s important to note that regulations and tax laws regarding life insurance can vary by country and region. Credit unions should work closely with financial advisors and insurance professionals who have experience with CUOLI to ensure compliance with relevant laws and to tailor the policy to their specific needs.