Credit Union Owned Life Insurance (CUOLI) is popular with credit unions as a financing or cost-recovery tool for employee benefits. CUOLI can also provide the credit union with the ability to offset expenses from existing benefit programs. 

Many credit unions utilize CUOLI as an investment strategy to fund, or cost-offset, benefit programs designed to reward and retain key employees. However, CUOLI is very flexible and is not just limited to executive reward programs as it can also offset other employee benefit programs including healthcare and other group benefits. 

CUOLI also offers returns that can compete favorably with the more traditional credit union investments and may potentially offer less interest rate volatility versus investments with mark-to-market concerns. 

Although past performance is not indicative of future results, currently CUOLI returns have a significant spread versus other credit union permissible investments. The cost of waiting to invest increases every day a credit union keeps funds in a low-to-no yielding asset versus using those funds for a CUOLI purchase. 


  Hypothetical Investment Comparisons (in 000s) 
  5 Year Treasury 


15-Year MBS 


20-Year MBS 















Net Income  










*Hypothetical values and growth rates were used to illustrate concept only and may not be used to project or predict investment results. The 5 Year US Treasury, 15 Year MBS (Mortgage Backed Securities), and 20 Year MBS (Mortgage Backed Securities) are all hypothetical representations of investments available to credit unions. These examples don’t represent actual returns. Actual returns will fluctuate and expenses may vary dependent on selling agent or broker. 

The performance data quoted represents past performance, which does not guarantee future results. Investment return and principal value will fluctuate so that your account value, when redeemed, may be worth more or less than the initial amount invested. 

The hypothetical investments are an example of permissible investments available to credit unions. The National Credit Union Administration (NCUA) allows for the purchase and holding to maturity of CUOLI products if it complies with §701.19 of NCUA’s rules regarding benefits for Federal Credit Union employees. CUOLI may recover the cost of the employee benefit and the cost of the funding for that benefit. CUOLI is considered a long-term asset. The hypothetical CUOLI example is a representation of a general account universal life insurance product available only institutional investors, not individuals. These type of policies are assigned a crediting rate by the issuing insurance company that is based on the experience of their own investment portfolio. The cash values are reduced by policy charges, expenses, and fees. The hypothetical net returns are based on crediting rates less insurance charges, expenses, and fees. 

This material is not intended to, and does not, present an opinion or advice with respect to accounting, legal, or tax matters. Please consult with your accountant, attorney, or tax advisor, as applicable.