Why Do Banks Own Life Insurance?

  1. 290 POINTS
    Mark Gilblair
    US Health Advisor, US Health Group, 2250 Point Blvd suite 322, Elgin IL. 60123
    Banks will own a life insurance policy equal to or near the value of a loan given to a client in the event the person dies before thay have had the opportunity to pay the entire loan back to the bank. If there is a balance after the loan is paid off the balance should go toward the the loan payers estate.
    Answered on May 24, 2013
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  2. 0 POINTS
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    David RacichPRO
    Fountain Hills, Arizona
    Assuming the question is addressing corporate bank owned life insurance (BOLI) and not the requirement of a bank to have the borrower secure life insurance to indemnify a loan, BOLI is an inexpensive group benefit that can generate tax free revenue to the banking institution. It is basically used as a tax advantaged vehicle. 
     
    Answered on May 24, 2013
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