BOLI (Bank-Owned Life Insurance)
This covers several aspects of how banks and corporations use life insurance, particularly focusing on Bank-Owned Life Insurance (BOLI) and Corporate-Owned Life Insurance (COLI). Let's break down these concepts:
- Definition: BOLI is a form of life insurance purchased by banks where the bank is the owner and beneficiary of the policy. It's typically taken out on key executives and employees.
- Usage by Banks: Banks use BOLI to offset the costs of employee benefits. The cash value of these policies grows tax-deferred, providing a tax-efficient asset for the banks.
- Benefits for Banks:
- Tax advantages: Earnings on the policy grow tax-deferred.
- Competitive employee benefits: Helps in funding employee benefits without affecting the bank's profitability.
- Balance sheet management: Offers an asset with stable returns, often used for managing balance sheet risk.
COLI (Corporate-Owned Life Insurance)
- Definition: Similar to BOLI, COLI policies are purchased by corporations on the lives of their employees. The corporation is both the owner and beneficiary.
- Usage by Corporations: Like banks, corporations use COLI to fund employee benefits and take advantage of the tax-free death benefits and tax-deferred cash value growth.
- Benefits for Corporations:
- Tax Benefits: The growth in policy cash values and death benefits are generally tax-free.
- Funding for employee benefits: Helps in providing pensions, health benefits, and other employee benefits.
- Balance Sheet Enhancement: The cash surrender values contribute positively to corporate assets.
General Trends and Regulations
- Amount of Money Held: The exact amount of money banks and corporations have in life insurance policies varies and is subject to financial reporting standards and regulations. Regularly published financial statements and disclosures might provide some insights, but they might not break down the details to the level of individual life insurance holdings.
- Regulatory Environment: Both BOLI and COLI are regulated under federal and state laws. The use of these policies has been scrutinized and regulated to ensure they are used appropriately and not for tax evasion or other unethical purposes.
While I can provide general information about BOLI and COLI, including their purpose, benefits, and how they appear on balance sheets, specific data on the amount of money held by banks and corporations in these policies, or identifying which entities hold the most, would require access to detailed and current financial reports that are not part of my training data. For the most current and specific information, consulting financial reports of individual banks and corporations, or industry-specific studies, would be necessary.