Business life insurance can help address challenges faced by business leaders navigating turbulent labor and economic landscape
This year marks the beginning of the largest surge of Americans turning 65 in American history – a trend business owners should have on their radar as they face daily challenges from today’s complex economic and labor markets. However, solutions like corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) can help address some of these challenges, according to a recent podcast featuring Nationwide Chief Economist Kathy Bostjancic and Nationwide Business Solutions Group Vice President Jessica Dowdy. 
COLI is life insurance for employers serving as the purchaser, beneficiary and owner, while BOLI is life insurance where a bank is the purchaser, beneficiary and owner. COLI and BOLI policies help businesses finance employee benefits and cover the expenses associated with replacing insured employees if that employee retires or passes away.
“Business owners are still reeling from the impacts of COVID, facing economic turbulence and focusing on attracting and retaining talent in a continued tight labor market,” said Dowdy. “Economic downturns can lead businesses to prioritize cost-cutting measures over investments in COLI and BOLI policies, but they can be great solutions to address these issues, particularly for those business owners interested in informally funding their deferred compensation plans.”
Employment market dynamics, including trends in executive retirement, are shaping demand for COLI policies. In today’s tight labor market, COLI policies can attract and retain talent by informally funding benefit promises made to employees, ensuring the business has the funding to meet these promises down the road. COLI policies can also be part of a business owner’s succession plan, mitigating risks as executives retire.
Additionally, the current economic environment can make COLI and BOLI policies more beneficial for business owners. With the consumer price index rising 3.5% from a year ago, rate cuts are expected to be delayed until September – meaning high interest rates are going to be sticking around for some time, according to Bostjancic.
“For most people, inflation is a scary thing, with Nationwide’s Advisor Authority survey finding investors listing inflation as their top concern over the next 12 months. In the BOLI space, however, the current environment is actually beneficial for banks who want to take advantage of current policy rates,” Dowdy said. “One of the other things Nationwide is doing to account for inflationary trends is adjusting COLI policy features and pricing to benefit our business owner customers.”
Nationwide has made several enhancements to its registered product, the Nationwide Innovator Corporate Variable Universal Life (VUL) policy, including a more streamlined, easy to understand, lower cost structure and improved institutional pricing. The VUL features over 140 investment options, as well as the lowest-cost fund lineup Nationwide has offered in the business life insurance market1. Businesses can also quickly accumulate cash value as a result of the product’s institutional pricing.
“There is so much opportunity in this market at this time, and we’re really proud of our 26-year commitment in this space,” Dowdy said. “Alongside our financial professional partners, we’re helping business owner clients face whatever comes their way through our ever-evolving product suite and our dedication to extraordinary care.”
Visit https://nationwidefinancial.com/products/business-life for more information and resources on business life insurance with Nationwide.
1 Weighted average fund expense is an average for the entire lineup and is based on Nationwide and Morningstar® historical data as of May 1, 2022
CLM-1238AO
04/2024