Bank-owned life insurance (BOLI) is life insurance purchased and owned by a bank on the lives of key employees or broad employee groups, with the bank as beneficiary. BOLI is used to help recover the long'term cost of employee benefits, executive compensation, and retirement programs. Policies are typically high'cash'value permanent contracts"often institutionally priced universal life or variable life"designed for stable, tax'advantaged accumulation on the bankTMs balance sheet. Regulatory guidance from banking authorities governs BOLI concentration limits, carrier selection, risk management, and ongoing monitoring. Mortality experience, credit quality, and interest'rate sensitivity are key risk factors banks must manage.

Advisors working in the BOLI market collaborate with bank executives, consultants, and carriers to design and implement programs that fit regulatory expectations and financial objectives. They analyze existing benefit expenses, model BOLI cash'value growth and income statement impact, and help choose carriers with strong ratings and diversified portfolios. Ongoing service includes annual BOLI reviews, stress'testing, and reporting to boards and regulators. Retail'focused advisors may encounter bank'owned life insurance conceptually when comparing it to COLI or executive benefit funding strategies. Understanding BOLI helps advanced planners appreciate how large institutions use life insurance as an asset class within a tightly regulated framework.