Financial advisors familiar with the type of life insurance banks buy to cover key executives could do a “good piece of business” selling these products to community banks, says Michael White, president of Michael White Associates, a consultant in Radnor, Pa.
Bank-owned life insurance (BOLI) assets totaled $134.6 billion in 2009, up 0.6% from 2009, according to the latest Michael White/Meyer Chatfield BOLI Holdings Report. Many advisors are already aware of BOLI’s corporate counterpart, company-owned life insurance. BOLI is a similar product, just owned by banks instead. When a key executive dies, while in office or in retirement, the bank uses the death benefit to help cover the cost of health and retirement benefits paid to the officer when he or she was alive.
Of the 8,012 banks (including thrifts, commercial banks and savings operations), half own BOLI. This number drops significantly at the smallest banks, those under $100 million in assets, White says. Only one-third of this group of banks insures its key officers. For financial advisors, even if they work in competing banks, “if they can guarantee confidentiality and have the expertise to do this,” selling BOLI could turn out to be a useful source of extra revenue in a tough market, White says.
This story has been reprinted with permission from Financial Planning.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access