Is The Amount of BOLI A Bank Can Purchase From One Carrier Limited By The Banks Legal Lending Limit?
In General Account, yes. Most banks purchase BOLI from a number of carriers to keep the amount from any one carrier exceeding the allowable range of the bank’s legal lending limit. However, with a separate account product the regulators recognize the separation of the cash value from the death benefit as a “look through” approach where bank eligible investments, i.e. treasuries, agencies, etc. are treated with the appropriate risk weighting and viewed as separate. Thusly, a separate account product does not fall under legal lending limit requirements for the purchase of BOLI.
