Bank Owned Life Insurance (BOLI) is commonly used by financial institutions to offset or recover the costs of doing business, including the informal funding of employee and executive benefit programs. The use of life insurance typically offers higher after-tax returns than other investment alternatives because any accumulation in the surrender value of the policies is tax-deferred and the death proceeds are received tax-free. These features make it an attractive asset-liability matching tool.

benefitRFP helps banks evaluate available BOLI products using our benefitMATRIX™ process, which takes the individual facts and circumstances of each client into consideration to help identify the best-performing options.

Features of BOLI:

  • The bank is the owner and the beneficiary of the policies.
  • The cash-value account is recognized as a Tier 1 capital (core capital).
  • Any growth in cash-value account is tax-deferred.
  • The death proceeds are received tax-free.
  • Earnings can be used to offset the cost of benefit expenses.
  • Diversifies a bank’s investment portfolio by adding a tax-advantaged asset alongside its taxable investments.