Thank you for sharing!

Your article was successfully shared with the contacts you provided.

ALEXANDRIA, Va.-NCUA determined in a recent legal opinion that federal credit unions have the authority to invest in life insurance products for the purpose of funding employee benefit obligations, use the pooled funding approach, and hold the insurance to maturity. In a legal opinion letter (03-0512), NCUA Associate General Counsel Sheila Albin wrote that federal credit unions could do all these things so long as it is in compliance with NCUA’s rules regarding employee benefits (701.19). “Specifically, among other things, the FCU must demonstrate a direct relationship between the pooled investments held to maturity and the employee benefit obligations to be funded,” she wrote. Albin added that investing in life insurance products is appropriate for funding employee benefits but it must be structured to recover the cost of the benefit and funding, not opportunity costs. “The relief granted by 701.19 from statutory and regulatory investment restrictions does not extend to investments made for an FCU’s own account,” she explained. However, Albin emphasized that purchasing life insurance can be complicated and carries certain risks, so the federal credit union should be aware of the risks associated with them.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.