Bank Owned Life Insurance (BOLI)

It is used as a tax-efficient financial tool to offset employee benefit costs, provide a source of income for the bank, and help cover the economic loss from a key person’s death. The cash value grows on a tax-deferred basis, and the death benefit is generally received tax-free by the bank.

Historically, BOLI was often combined with a new executive benefit plan for senior executives. However in more recent years many banks have added BOLI in order to offset existing employee benefit expenses.