Warren Wamberg is an established Southern California financial services executive who has authored several books. Among the topics of Warren Wamberg’s published works is bank-owned life insurance (BOLI), a tax efficient form of insurance that financial institutions employ in offsetting the costs associated with employee benefits.
BOLI is typically purchased as a single premium, but may also be acquired gradually through annual premiums. With a BOLI policy, the bank acts as the beneficiary. Tax-deferred BOLI cash surrender values increase over time, while allowing the bank to claim a bookable income on the policy each month. At the time of the executive’s passing, the bank receives death benefits, with no taxes assessed.
As a tax-favored asset, BOLI generally delivers after-tax returns that significantly exceed other types of long-term investment, including mortgage backed securities, municipal funds, and 10-year treasury notes. While the bank acts as sole beneficiary and owner of the insurance, in many cases a share of the proceeds is distributed among participants.
