A Bank Owned Life Insurance program is offered to a bank as an opportunity to take advantage of tax deferred cash value growth. The Comptroller of the Currency (OCC) needs to approve the use of a BOLI if it is incidental to their banking function. A BOLI use includes:

  • Key-person insurance
  • Insurance on borrowers
  • Funding of employee compensation or benefit plans
  • Insurance taken as security for a loan

A Corporate Owned Life Insurance program is owned by the employer corporation who insures employees’ lives, with benefits payable to the corporation. Corporations purchase a COLI to mitigate the financial costs of losing key employees to unexpected death, the risk of recruiting and training replacements of necessary or highly-trained personnel, or to fund corporate obligations to redeem stock upon death of an owner.