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FIL-127-04 Attachment TOC

Interagency Statement on the Purchase and Risk Management of Life Insurance

December 7, 2004

Table of Contents

Purpose
Background
Legal Authority
Accounting Considerations
Supervisory Guidance
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
Risk Management of BOLI
Liquidity Risk
Transaction/Operational Risk
Tax and Insurable Interest Implications
Reputation Risk
Credit Risk
Interest Rate Risk
Compliance/Legal Risk
Price Risk
Risk-Based Capital Treatment
Criteria for a Look-Through Approach
Look-Through Approaches
Summary
Appendix
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
Glossary

Last Updated: March 24, 2024