BOLI COLI: Weird Acronyms for Powerful Wealth Strategies

Have you ever heard the acronyms “BOLI COLI”? I’m guessing you haven’t, unless you’re a life insurance nerd like me. But when you understand what these mean, you’ll discover a powerful wealth strategy for your own finances.

BOLI and COLI refer to bank-owned life insurance and corporate-owned life insurance. Banks and corporations have been leveraging these tools for decades to grow wealth, protect assets, and fund pensions.

What does this mean for you? It means you can take the same strategies that financial giants use and apply them to your personal wealth planning.

Want a more detailed understanding of this strategy? Get your free copy of What Would the Rockefellers Do? by Garrett Gunderson and me. This bestselling book reveals the financial strategy used by the wealthy to protect, grow, and pass on legacy wealth.

Understanding BOLI COLI

The same concept applies to COLI, except corporations use it to protect executives or fund future obligations.

The key advantage? The cash value of these policies grows tax-deferred, and when the insured passes away, the business receives a tax-free death benefit. This helps them offset pension costs and other liabilities.

So why do banks and corporations do this? Simple. It’s a reliable, tax-efficient way to secure financial stability and replace wealth that gets spent on employees or investments.

One of the biggest users of COLI is Walmart. The retail giant purchases life insurance policies on thousands of employees. When an insured employee passes away, Walmart receives a payout. This helps fund benefits and other corporate obligations.

Now, think about how you can apply this concept to your own finances. Instead of worrying about running out of money, you can enjoy life knowing your wealth is protected.

Why Banks & Corporations Use BOLI COLI

• Tax-Deferred Growth: During the accumulation phase, the cash value grows without being taxed.
• Tax-Free Death Benefit: With COLI, when the insured passes away, the death benefits are paid out tax-free to the corporation. This provides a financial buffer for future employee benefits or other company needs.
• Liquidity: Banks and corporations can access the cash value at any time. This gives them a stable, low-risk source of funds for various financial and investment purposes. Corporations can use it to manage cash flow.
• Diversification: By investing in BOLI and COLI, banks and corporations can diversify their portfolios. This gives them greater financial stability.
• No Surrender Charges: Unlike many other financial products, BOLI and COLI don’t come with surrender charges. This makes it a flexible option for long-term planning.
• Tier 1 Capital Reserve: The cash value of BOLI counts as a Tier 1 Capital Reserve. This improves the bank’s regulatory compliance and financial standing.

Leverage the Concept of BOLI COLI for Your Own Wealth

You don’t have to be a bank or a corporation to use this approach. Whole life insurance works the same way for individuals. When structured correctly, it becomes a powerful wealth replacement tool. It’s also why people use whole life insurance for retirement.

Think of it like this: During your working years, your income supports your lifestyle. What happens when you retire? Most people either live off savings or rely on investments. But those can run out.

A properly structured and optimally funded whole life policy ensures you don’t have to fear running out of money. (Some people call it overfunded whole life insurance, but this is a misnomer.) Whole life insurance gives you peace of mind for retirement because it gives you:

1. Guaranteed Cash Value Growth: Unlike stocks, bonds, or other volatile investments, whole life insurance provides guaranteed cash value growth. This ensures your wealth steadily increases without exposure to market downturns.
2. Tax-Advantaged Wealth Accumulation: The cash value in a whole life policy grows tax-deferred. This allows your money to compound faster than it would in taxable investment accounts.
3. Access to Capital Without Penalties: Retirement accounts may have restrictions or penalties for early withdrawals. But whole life insurance allows you to access your cash value at any time through policy loans. You can use this money for living expenses, investments, or emergencies without worrying about taxes or penalties.
4. Dividend Payments: If you own a participating whole life policy, you may receive dividends. Many policyholders use these dividends to increase their cash value, pay premiums, or supplement their retirement income. Over time, this can provide a reliable source of additional funds.
5. No Market Risk: Unlike traditional investment portfolios, whole life insurance is not subject to stock market fluctuations. This means your cash value continues to grow regardless of economic downturns or financial crises.
6. Wealth Replacement Through the Death Benefit: The death benefit of a whole life policy ensures that whatever you spend during your lifetime can be replaced for your heirs. This allows you to enjoy your wealth in retirement without fear of leaving your family financially vulnerable.
7. Supplementing Retirement Income: Many policyholders use whole life insurance as a source of supplemental retirement income. By borrowing against the policy’s cash value, you can create a tax-free income stream while still maintaining your other investments.
8. Protection from Longevity Risk: One of the biggest fears in retirement is outliving your money. Whole life insurance provides a built-in safety net, ensuring you always have access to capital when needed.

With whole life insurance, you can create a stable, long-term wealth solution. The benefits of whole life insurance include giving you financial security, liquidity, and peace of mind.

The Rockefeller Method: Spending and Leaving a Legacy

The wealthy don’t just save money. They make sure their money keeps working for them—during life and after death. This is the essence of the Rockefeller Method.

The Rockefellers didn’t just pass down money. They used life insurance to replace assets spent in their lifetime. This let them enjoy their wealth while ensuring their heirs still inherited substantial financial security.

You can do the same thing with what we call Rockefeller Method life insurance:

• Use your assets freely during retirement.
• Rely on the death benefit to replenish what you spent.
• Pass on tax-free wealth to future generations.

By doing this, you get to enjoy more of your money while knowing your family will still be financially secure. This is how you leverage the concept of BOLI COLI in your own life.

How to Set This Up for Yourself

1. Work with a Specialist: Not all policies are the same. You need one structured for maximum cash value and long-term benefits.
2. Fund Your Policy Early: The sooner you start, the more time your cash value has to grow.
3. Use the Cash Value: Borrow against it for investments, major purchases, or emergencies without depleting your savings.
4. Ensure Your Legacy: Plan so that your death benefit replaces assets spent in your lifetime.

Understand BOLI COLI to Protect and Grow Your Wealth Like a Bank

Banks and corporations aren’t just buying life insurance because it sounds good. They use BOLI COLI because it works. You can take the same approach with whole life insurance in your own wealth plan.

By using this as a wealth replacement tool, you can confidently enjoy your money in retirement. You’ll know that when the time comes, your legacy is secure.

Don’t leave your financial future to chance—structure your wealth the way banks and corporations do, and create lasting security for yourself and your loved ones.

Want to dive deeper into this strategy? Get your free copy of What Would the Rockefellers Do? by Garrett Gunderson and me. This bestselling book reveals the financial strategy used by the wealthy to protect, grow, and pass on legacy wealth.