Senior Management and Board Oversight

Policies and Procedures

Pre-Purchase Analysis

I. Identify the Need for Insurance and Determine the Economic Benefits and Appropriate Insurance Type

II. Quantify the Amount of Insurance Appropriate for the Institution's Objectives

III. Assess Vendor Qualifications

IV. Review the Characteristics of the Available Insurance Products

V. Select Carrier

VI. Determine the Reasonableness of Compensation Provided to the Insured Employee if the Insurance Results in Additional Compensation

VII. Analyze the Associated Risks and the Ability to Monitor and Respond to those Risks

VIII. Evaluate Alternatives

IX. Document Decision

Liquidity Risk

Transaction/Operational Risk

Tax and Insurable Interest Implications

Reputation Risk

Credit Risk

Interest Rate Risk

Compliance/Legal Risk

Price Risk

Criteria for a Look-Through Approach

Look-Through Approaches

Common Types of Life Insurance

Temporary (Term) Insurance

Permanent Insurance

Purposes for Which Institutions Commonly Purchase Life Insurance

Key Person

Financing or Cost Recovery for Benefit Plans

Split-Dollar Life Insurance Arrangements

Life Insurance on Borrowers

Life Insurance as Security for Loans