Bank-Owned Life Insurance · BOLI
What is a
BOLI benchmark?
Most banks review their BOLI every year. Far fewer ever compare it to the market. A benchmark fills that gap.
Quick answer
- A BOLI benchmark is an independent comparison of the policies your bank already owns against what is available in today's market.
- It looks at crediting rates, the strength of the carrier, product design, and fees where they are disclosed. An annual review usually checks a policy against its own history. A benchmark checks it against the market.
- No change of agent of record is needed, and your bank decides what, if anything, to do with the results.
Why an annual review is not a benchmark
A typical annual review asks whether each policy is doing what it was expected to do. Is the cash value where the illustration said it would be? Is the crediting rate in line with last year? Those are fair questions, but they compare the policy to itself.
They do not tell you whether a policy bought 10 or 20 years ago still holds up against what newer products and other carriers offer today. Crediting rates can drift lower over time, and older designs were built with the options of their day. Often the review comes from the same agent who placed the policy, so no one is asking how the market has moved. BOLI is also a small line on a big balance sheet, which makes it easy to leave alone for years.
What a benchmark compares
Crediting rates
What your policies are earning now, set next to what comparable products in the market are crediting.
The carrier
The financial strength of each insurance company you hold, and how much of your BOLI sits with any one carrier.
Product design
How the policy is built: general account, separate account or hybrid, and the features and options that come with it.
Fees, where disclosed
The costs inside the policy, to the extent the carrier discloses them, compared with what is typical today.
How the process works
1. A short intro call
About 20 minutes to understand what your bank holds and what you would like to learn.
2. We gather the policy details
Policy statements and in-force details from your bank's records. No change of agent of record is needed.
3. An independent comparison
A team with decades of BOLI experience measures your policies against what is available in today's market.
4. You see the results
Where your BOLI stands, where there may be room to improve, and what any change would involve. Then your bank decides.
What a benchmark is not
It is not a sales pitch for a new policy, and it does not commit your bank to anything. Some banks find their policies are doing fine, and that is a good outcome too. You walk away with an independent record of where your BOLI stands, which is useful for the board, the auditors and the examiners.
Regulators already expect banks to monitor BOLI on an ongoing basis, including carrier credit risk and concentration relative to capital. A benchmark adds the one view an internal review usually leaves out: the market.
If the results point to a change
When there is room to improve, existing policies can often move into newer ones through a 1035 exchange, which lets one life insurance policy be exchanged for another without tax on the gain when it is done properly. Any move is reviewed with your CFO, your auditors and your CPA or tax professional, with your regulator's expectations in mind. New to the terms? Start with BOLI vs. COLI.
Frequently asked questions
What is a BOLI benchmark?
An independent comparison of your bank's existing BOLI policies against today's market, covering crediting rates, carrier strength, product design and fees where disclosed.
How is a benchmark different from an annual BOLI review?
An annual review usually checks whether a policy is performing as illustrated, which compares it to itself. A benchmark compares it to what other carriers and newer products offer now.
Do we have to change our agent of record to get a benchmark?
No. The benchmark does not require a change of agent of record. You get the results and decide what to do next.
What if our policies compare well?
That is a good outcome. You will have an independent record that your BOLI is competitive, which is useful for your board, your auditors and your examiners.
Educational content only. This is not tax, legal, accounting or regulatory advice. Every bank's situation is different. Review any BOLI decision with your CFO, your auditors, your legal counsel, and your CPA or tax professional, and keep your regulator's expectations in view. Policy values depend on the terms of each contract and the financial strength of the issuing insurance company.
Find out where your BOLI stands
A short call, an independent comparison, and a clear answer. No change of agent of record is needed. Request a BOLI review, read the BOLI overview, or call +1 (586) 899-1003.
Keep Reading
More in Bank-Owned Life Insurance
Sources
Interagency Statement on the Purchase and Risk Management of Life Insurance (OCC Bulletin 2004-56) · 26 U.S. Code 101 · 26 U.S. Code 1035
Educational content only.