Bank-Owned Life Insurance - BOLI

"BOLI" for short. If Mrs. Bank Employee has an employer-matched contribution to her 401(k), chances are good that the amount paid by the bank came out of this insurance trust. As the name would suggest, a bank can purchase life insurance with itself as the owner/beneficiary. It is usually used for the purposes of a tax shelter, since it's a tax-free way for the bank to fund employee benefits. That way, Uncle Sam can't get his hands on any of the premiums paid into this specialized fund, including any capital appreciation.