How do banks, credit unions, and other financial industry organizations use tax-advantaged products to offset costs?
Bank-Owned Life Insurance (BOLI) is a great way for banks to save money on their employee benefit costs.
Banks are required to pay their employees an adequate benefits package. While being fiscally responsible and profitable in the long term. The rising cost of employee benefits is a problem faced by businesses of all sizes and BOLI is a viable solution for banks, credit unions and other community financial institutions.
A 2021 study of the location of U.S. banks reveals the amount of bank assets in life insurance. Here are the first 3:
Regardless of the type of BOLI program used, the biggest benefit is that income earned on the cash value of policies is generally not considered an employee’s taxable income – unlike the benefits you would typically see in a 401(k) or profit sharing. plan.
“Through this BOLI study, we learned how it has already helped fund scholarships, construct community buildings and more. We can now clearly see that life insurance to supplement income is a solution that could be used by middle-class people to turn their debt into income and generational wealth,” says
“Through our research, we found that a similar solution under current tax law would work for individuals, families, business owners and non-profit organizations. Due to the change in the
Now, the cash value in an IUL could include the policy owner’s debt balance, which would provide a tax-free death benefit, living benefits and tax-free, risk-free potential gains.
This means that an individual, family or business owner could put the money needed to pay their debts into the policy and borrow that money while continuing to pay their debts.
“By using Accelerated Debt Repayment and funding an IUL with the insured’s debt balance, the insured can fund their own bank in less than 10 years. Using a special endorsement that makes a liquid policy gives the insured access to growing cash value as loans that never have to be repaid. This disrupts Infinite Banking”. Explain, Harris.
Because it is a loan from the insurance company, there are tax advantages and whatever the amount of the loan, it is secured by the policy owner’s cash value, which was at Originally the balance of the debt, the loan is paid by the guarantee when the insured dies.
Read the full story at https://www.prweb.com/releases/2022/05/prweb18651983.htm