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Group Term Replacement Plan

  • The bank provides Group Term Life insurance through Bank Owned Life Insurance.
  • The benefit can mirror the Group Term plan or it can be enhanced (i.e. remove cap, provide post retirement).
  • The bank maintains the first $50,000 of coverage with the Group Term provider to deter adverse census rates by removing insureds from the pool.
  • Participant reports a reduced amount of annual reportable income due to less expensive one-year term rates utilized by insurance carriers than those used by Group Term providers that are based on IRS tables.
  • The bank will own the cash values of the individual, permanent BOLI policies, and show the earnings of the policies (cash value increases) on its financial statements.
  • The bank will be the beneficiary of the death benefits in excess of each executive’s multiple of salary.
  • The plan design will create significant net income for the bank, rather than the pure expense of the current group term premiums.