Lisa Oddis- BOLI / COLI Underwriting
Guaranteed Issue underwriting for BOLI and COLI is a desirable type of insurance underwriting for banks and corporations. It is simple and does not put a burden on your key employees. Medical exams, lab work and Ecg’s are NOT required. There is a simple questionnaire which usually asks for tobacco status and whether the employee has missed more than 3-5 concurrent days due to illness or injury.
The census is of the utmost importance for these cases. There are specific requirements for the proposed group of insureds that the carriers and reinsurers evaluate and upon which they base approval. The basic parameters are as follows:
- Average age of the group, titles and annual compensation– These individuals must meet the eligibility requirements for Highly Compensated Employees (HCE’s) for Nonqualified Plans.
- Definition of eligibility for the group such as, all VP’s and above– There is a fair amount of design flexibility, but once defined, you must include 100% of the employees in that group. This is a 409(a) regulation.
- Policy design such as level amount of premium, death benefit or net amount at risk on each of the employees. Or the design may be more random such as values are based on proceeds from a Section 1035 Exchange.
The person or group that you partner with should have good relationships with various insurance carriers and be familiar with their requirements as well as possess knowledge and experience with Nonqualified Plan design and IRS Sec. 409(a) regulations and Department of Labor regulations.