BOLI · Bank-Owned Life Insurance
Your BOLI was a good decision. Is it still a good policy?
Many banks bought bank-owned life insurance years ago and haven't compared it to the market since. An independent benchmark shows how your policies stack up against what's available today, so your team can decide with real numbers.
Independent review · No change of agent required · Works alongside your CFO and auditors
What BOLI is
Bank-owned life insurance, or BOLI, is permanent life insurance a bank buys on a group of its officers or employees, with their consent. The bank pays the premium, owns the policy and is the beneficiary.
Banks use it because the cash value grows tax-deferred and the death benefit is generally income tax-free when the notice and consent rules are followed. That growth helps offset the rising cost of employee benefits, like health care and retirement plans.
Company-owned life insurance, or COLI, works the same way for businesses that aren't banks.
Why older BOLI deserves a second look
BOLI is often a small line on a big balance sheet, so it can go years without a real review.
Crediting rates drift
The rate your policies earn can fall well behind what newer products pay, and it rarely gets flagged on its own.
Older product designs
Policies bought 10 or 20 years ago were built with the options of that time. The market has changed.
Annual reviews aren't benchmarks
An internal review or one from the agent who sold it usually checks the policy against itself, not against the market.
Regulators expect it
Bank regulators expect ongoing review of BOLI risk, performance and concentration, not a buy-and-forget asset.
How a benchmark works
A short process built around your CFO's time.
A short intro call.
About 20 minutes to understand what you hold and what you'd want to learn.
We gather the policy details.
No change of agent of record is needed to run the review.
An independent comparison.
A team with decades of BOLI experience measures your policies against what's available in today's market.
You see the results.
Where your BOLI stands, where there may be room to improve, and what any change would involve. Then your team decides.
If a change makes sense
Some banks find their current policies are doing fine. That's a good outcome too.
When there is room to improve, existing policies can often move into newer ones through a 1035 exchange, a section of the tax code that lets one life insurance policy be exchanged for another without triggering tax on the gain. Any move is reviewed with your CFO, your auditors and your regulators' expectations in mind.
Common questions
What is BOLI?+
Bank-owned life insurance is permanent life insurance a bank buys on its officers or employees, with their consent. The bank owns the policy, pays the premium and is the beneficiary. Banks use it to help offset the cost of employee benefits.
Is BOLI taxable?+
Cash value growth is generally tax-deferred, and the death benefit is generally income tax-free when the insurance notice and consent rules are met. Surrendering a policy can create taxable income, which is why changes are usually done through a 1035 exchange.
How much BOLI can a bank hold?+
Bank regulators expect a bank to keep its BOLI within prudent concentration limits relative to its capital, and to review it on an ongoing basis. Your exact limit depends on your bank, so it's part of every review.
What is a BOLI benchmark?+
A benchmark compares your existing policies against what's available in today's market, including crediting rates and product design. It's different from an annual review, which usually checks a policy against its own history.
Do we have to change agents to get a review?+
No. The review doesn't require a change of agent of record. You get the results and decide what, if anything, to do next.
What's the difference between BOLI and COLI?+
They work the same way. BOLI is owned by a bank, and COLI is owned by a company that isn't a bank.
Keep learning
Find out where your BOLI stands.
A short call, an independent comparison, and a clear answer. If your policies are doing well, you'll know that too.
Educational content only. Not financial, legal, or tax advice. All services are provided by licensed professionals. Coverage decisions depend on individual circumstances.