Bank owned life insurance or BOLI, sometimes referred to as government guaranteed life insurance or government preferred business insurance, is a type of life insurance that has been acquired by banks from the federal government. While it may sound odd, BOLI can be a very effective tax shelter for the bank and is a major source of capital for the company.
While this type of insurance was once reserved for senior citizens, it has become quite common for small businesses. This insurance provides a way to protect the bank in case the person who holds the policy should die. There are a number of different types of this type of insurance but some of them cover you for any death and others only cover you if you die within a certain amount of time after purchase. Most banks offer this type of insurance for all employees but some companies will have you purchase it for the company before they provide it to you.
If you hold an insurance policy from your own company’s employees, then you could choose to sell the policy to a bank that handles your business. Banks usually prefer policies that are tax free so they will often give the policy to you if you purchase it from them.
As with any good policy, you need to understand the risks involved. It is always a good idea to have at least a general understanding of what you are getting yourself into before purchasing a policy. This will save you time and allow you to make more informed decisions about your investment portfolio. Some insurance companies charge a higher premium than others and you should take the time to compare the rates and terms of each company before you purchase.
One of the most important things that you should do before buying bank owned insurance is to research and understand all of the ins and outs of the policy. This includes knowing whether the policy pays out benefits to your beneficiaries should you die, as well as understanding how much money will go to your beneficiaries and how much must be left in your estate. After you have all of the details on the policy in your hands, you should understand the policies risks and be able to make wise investment decisions before purchasing.
Because bank owned life insurance is offered by the federal government, it is a type of policy that does not require a credit check or pre-approval from a lender before being offered. You will be able to purchase the policy without any questions about a financial background or credit history being asked. There are some banks that will ask for an annual credit report, but others don’t.
One of the downsides to this type of policy is that many of these policies come with high costs. The premiums can be very high and they often have higher levels of deductibles and limits than other policies.
In most cases, the costs of bank owned life insurance will not include any state or federal taxes, although you should check with your lender to find out. There are a number of insurance companies that offer this type of insurance and they have different types of plans. This can be a good way to protect the bank if something were to happen to the policy holder. Some insurance companies even provide a guaranteed cash value insurance plan that can pay off the policy if the insured dies within a certain amount of time after purchase.
Bank owned life insurance is not only a good way to protect your family if you are unfortunate enough to pass away, it is also a good investment for your family. If you can afford to purchase this type of insurance, the benefits are well worth it. You have probably seen advertisements about this type of insurance and probably wondered if they are right for you. Well the answer to that question is yes, if you do your research.
When you search online for different types of insurance companies, you may get offers that are similar but don’t always offer the same policies. You want to be sure to consider the different aspects of each company’s services and benefits before making your final decision.
You should also compare these offers with the different options available for you. Remember, it is important that you make the right investment with this type of insurance.