Concepts · Institutional Life Insurance

Why institutions put billions into life insurance

Banks and companies do not view permanent life insurance only as a death benefit. They also use it as a long-term financial asset for protection, benefit funding, and balance-sheet planning. GOLI, COLI, and BOLI describe who owns the policy.

COLIThe broad corporate category

BOLIA bank-specific form of COLI

GOLINot a standardized U.S. regulatory category

The ownership map

Same foundation, different institution

COLI is the umbrella term for employer-owned life insurance. BOLI sits inside that umbrella and follows banking-specific rules. “GOLI” is sometimes used informally for government-associated coverage, but it is not a directly comparable, standardized cash-value category.

GOLI

Government-associated life insurance

Owner: No single standard owner
Who is covered: Public employees or service members
Primary role: Employee or service-member coverage
Balance-sheet treatment: Usually not a government balance-sheet asset

COLI

Corporate-owned life insurance

Owner: A company or other employer
Who is covered: Employees, owners, or key people
Primary role: Key-person protection, benefit funding, or business continuity
Balance-sheet treatment: Cash value is recorded as a company asset

BOLI

Bank-owned life insurance

Owner: A bank
Who is covered: Eligible employees, executives, directors, or other permitted lives
Primary role: Benefit-cost recovery, key-person protection, and permitted banking uses
Balance-sheet treatment: Cash value is reported on bank regulatory filings

A necessary terminology note

Federal Employees’ Group Life Insurance (FEGLI) is a government-sponsored program, not government-owned cash-value life insurance. OPM states that FEGLI is group term insurance and does not build cash or paid-up value. That is why a national “GOLI assets” figure cannot be placed beside BOLI cash surrender value as if the two measured the same thing.

How much is in life insurance?

Billions committed for the long term

Institutional use shows that life insurance is more than a consumer product. Banks and companies use it within long-range financial plans. The figures below demonstrate the scale, while measuring three different parts of the market.

$202.4B

BOLI cash surrender value

Total reported by U.S. banks as of June 30, 2023, based on FDIC call-report fields for general, separate, and hybrid accounts.

$9.3T

Life insurer admitted assets

Total net admitted assets reported by the U.S. life and accident-and-health insurance industry at year-end 2024. This is insurer balance-sheet data, not policy cash value.

$22.2T

U.S. life insurance in force

The face amount of life insurance coverage in force in 2023. This measures promised death benefits, not invested cash value.

The institutional confidence signal: U.S. banks alone held more than $200 billion of reported life-insurance cash surrender value. Highly regulated institutions use these policies because properly structured permanent insurance can support long-term obligations while providing protection and cash-value accumulation.

Institutional use at scale

Why major institutions keep using it

Protection with long-term financial utility

Institutional adoption does not make every policy risk-free or right for every buyer. It does show that properly structured permanent life insurance is an established financial tool — one that can combine protection, cash value, tax advantages, and long-duration planning in a single contract.

Protect a key person

The death benefit can help an institution absorb the financial impact of losing a person whose role is important to the organization.

Offset benefit costs

Long-term policy economics may help offset the cost of employee compensation, retirement, and welfare benefit programs.

Hold a long-duration asset

Permanent policies can build cash surrender value that appears as an asset on the owner’s balance sheet.

The takeaway

Institutions use life insurance because durability matters

Banks and companies plan in decades, not days. Their use of permanent life insurance demonstrates that a properly designed policy can be a credible part of a long-term financial strategy. It is not a guarantee: costs, carrier strength, liquidity, and product performance still have to be evaluated carefully.

Before calling it “tax-free”

The rules matter as much as the policy

Notice and consent

Employer-owned contracts are subject to federal notice, consent, insured-status, and reporting requirements, including Internal Revenue Code Section 101(j) and IRS Form 8925.

Tax treatment is conditional

Cash-value growth is generally tax-deferred and qualifying death benefits are generally income-tax-free. Surrenders, withdrawals, loans, or policy changes can create tax consequences.

Oversight differs

Banks operate under specific supervisory guidance for permissible uses, concentration, liquidity, carrier credit quality, and risk management. Ordinary corporations follow a different framework.

Research notes

Data and definitions reviewed from the Office of the Comptroller of the Currency’s BOLI guidance; FFIEC/FDIC bank call-report data; the U.S. Office of Personnel Management’s FEGLI materials; the NAIC 2024 Life and A&H Industry Annual Results; the ACLI 2024 Life Insurers Fact Book; and IRS employer-owned life insurance reporting guidance. Figures are dated as labeled and are for education only, not tax, legal, accounting, or investment advice.