Bank Owned Life Insurance (BOLI)

Bank Owned Life Insurance, also known as BOLI, is a transaction that has gained wide acceptance in the banking community as a sound and profitable financing strategy. It involves the selling of Tier 1 capital and using the proceeds to pay for a single premium BOLI policy or policies. We are among the first firms in the country to offer community banks the opportunity to benefit from the same customized bank sponsored programs which previously have only been available to the largest banks.

BOLI is often utilized to enhance a bank’s financial statement in order to informally finance, or offset, Deferred Compensation or Supplemental Executive Retirement Plan (SERP) benefits for a select group of senior management or highly compensated bank employees. BOLI can also be utilized to offset costs for existing qualified retirement plans or to more efficiently finance employee benefit programs such as the group term life insurance coverage.e. 

The benefits of BOLI include:

  • Earning a higher rate of return than other financial products (the gain on which could be reduced by taxes) because gains are not taxable
  • Obtaining institutionally priced life insurance
  • Generating an increase of 150-200+ basis points in after-tax investment yield depending on both interest rates and tax rates
  • Providing significant benefits for senior bank executives usually without negative net impact on the bank’s earnings

The evaluation of BOLI transactions requires an informed corporate sponsor and a benefit  consulting firm, such as the Glenn G. Geiger Company, experienced in Nonqualified Plan design and administration.

About

Glenn G. Geiger Company, Inc.
22 Grove Street | Darien, CT 06820
Tel: (203) 202-9233