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Why Should a Credit Union Invest in Credit Union-Owned Life Insurance?

There are many advantages to implementing a credit union-owned life insurance (COLI/CUOLI) program. Here, Scott B. Hinkle, J.D., CFP, and Principal at Acumen Insurance Solutions, talks about why a credit union should invest in credit union-owned life insurance. 

Let’s get started.

What is Credit Union-Owned Life Insurance?

Credit union-owned life insurance (COLI/CUOLI) is an “otherwise impermissible investment” that credit unions often use to pre-fund employee benefit expenses under Section 20. Policies insure the lives of individual executives or groups of key people and are designed to generate competitive current yields on cash values. 

invest in credit union owned life insurance

Why Should Your Credit Union Invest in Credit Union-Owned Life Insurance?

So, why should your credit union consider investing in credit union-owned life insurance (COLI/CUOLI) as opposed to the other options that are available?

  1. It’s Safe: Credit union-owned life insurance policies are issued by life insurance carriers that have been around 100 to 150 years.
  2. It’s Liquid: In the event that you choose to redeploy your capital elsewhere, you have the ability to do so with a credit union-owned life insurance policy.
  3. It Provides Meaningful Rates of Return: These policies are currently earning very meaningful rates of return. In fact, they are currently yielding between 2.5% and 5.0%, depending upon the class of policy selected.*

For all of these reasons, credit union-owned life insurance should be something that all credit unions consider in today’s challenging investment and interest rate environment.

Interested in learning more about why you need to periodically review your existing COLI plans? Read on in “Auditing Existing COLI Plans for Credit Unions.”

*Disclaimer: These policies are not considered securities. Guarantees are based on the claims-paying ability of the underlying insurance carrier. Policies are not FDIC-insured. Pricing can be based on many factors, including the insured’s age, gender, and health. Please refer to a current policy illustration for details.