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BOLI

Bank Owned Life Insurance

A tax-efficient asset for banks

Bank Owned Life Insurance (BOLI) is a tax-efficient structure that helps banks of all sizes offset the costs of employee benefit programs and improve after tax returns.

BOLI assets accumulate on a tax-deferred basis, with changes in value recorded as other non-interest income. When structured properly, BOLI provides tax-free death benefits that can help offset long-term employee benefit costs and improve portfolio yields compared to other alternatives.

How BOLI Works

Banks purchase life insurance on officers and key employees through single or annual premium payments. The institution serves as both owner and beneficiary, receiving tax-deferred cash value growth during the insured's lifetime and tax-free death benefits upon their passing.

Economic Benefits

Superior Returns

BOLI can deliver returns above other bank eligible assets making it immediately accretive to earnings.

Tax Efficiency

Tax-deferred cash value accumulation and tax-free death benefits provide significant long-term economic advantages.

Enhanced Performance

Improves key financial metrics including return on equity (ROE) and return on assets (ROA) while strengthening the balance sheet.

Product Structure

Three BOLI Product Types

Understanding the differences between BOLI structures is critical to selecting the right solution for your institution's risk tolerance and investment objectives.

General Account

The traditional BOLI structure where the insurance carrier invests premiums in their general account. Offers guaranteed minimum crediting rates and simplicity.

  • Guaranteed minimum interest rates
  • Simplest structure to implement
  • Backed by carrier's general account
  • Quarterly or annual crediting

Separate Account

Premiums are segregated into bank-eligible investments managed by institutional fund managers. Offers greater transparency and protection from carrier creditors.

  • Not subject to carrier creditors
  • Detailed investment reporting
  • Stable value feature available
  • Greater investment flexibility

Hybrid Account

Combines features of both structures—delivering transparency and current crediting rates with guaranteed minimums and creditor protection.

  • Creditor protection included
  • Guaranteed minimum rates
  • Lower risk-based capital weights
  • Enhanced transparency

Our Expertise

IIG's BOLI Advisory Services

IIG provides comprehensive BOLI advisory services, guiding financial institutions from initial due diligence through the ultimate maturity of the asset. Our experienced team ensures your BOLI program meets regulatory requirements while maximizing economic benefits.

We maintain close collaboration with our bank clients, providing ongoing carrier credit analysis, investment analytics for separate account products, and mortality forecasting projections to optimize program performance.

Pre-purchase due diligence and carrier selection
Insurance company credit analysis and monitoring
Separate account investment analytics
Mortality forecasting program projections
Regulatory compliance and OCC guidance adherence
Ongoing administration and death claim processing

Optimize Your BOLI Program

Whether you're evaluating a new BOLI purchase or seeking to optimize an existing program, IIG's experienced team is ready to help.

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