NWCUA Regulatory Advocacy Update: Advisory Opinion on BOLI Expected from Washington DFI

Washington’s Department of Financial Institutions (DFI) is expected to issue an advisory opinion in the near future on whether credit unions can invest in bank-owned life insurance (BOLI).

BOLI is a form of life insurance purchased by banks in which the bank is the beneficiary and/or owner of the policy. This form of insurance is a tax shelter for the administering bank, as it is a tax-free funding scheme for employee benefits that also serves to offset the liabilities associated with retirement benefits.

“I believe DFI will issue an opinion allowing credit unions to purchase BOLI,” said Northwest Credit Union Association (NWCUA) Director of Regulatory Advocacy John Trull. “Expanding the investment powers of credit unions is a step in the right direction.”

BOLI assets can be divided into three types: separate account life insurance (SALI) assets, general account life insurance (GALI) assets and hybrid account life insurance (HALI) assets.  If a credit union chooses to purchase BOLI, the covered employee will likely have to be notified and consent to the purchase.

According to the Michael White/Meyer-Chatfield Bank-Owned Life Insurance Holdings Report, 81 percent of bank and thrift holding companies and 34.5 percent of stand-alone banks have at least some BOLI holdings, marking 8.6-percent and 13.2-percent year-over-year growth, respectively, from the same period in 2011.

BOLI assets nationwide increased by 8.7 percent over the last year, reaching $145.6 billion through 2012’s first quarter. Approximately one-third of that overall increase ($3.78 billion), however, came as a result of the two-year phase-in of new reporting requirements for a limited number of thrift holding companies that began this year.


The NWCUA Regulatory Advocacy team works with state and federal regulators to help reduce the regulatory burden on credit unions and protect the credit union movement. The Association encourages members to participate in the regulatory process. If you have any questions on these or any regulatory issues, please contact Director of Regulatory Advocacy John Trull at jtrull@nwcua.org, or at 503.350.2209.

Posted in Advocacy News, Around the NW, NWCUA.