Services
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.
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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