Bank owned life insurance? BOLI
Anyone out there had experience with this? I've got some clients that are close to decision makers re: a policy w/ $5mil in cash value. What's this mean commission wise? Is it worth the time or is it low margin business? Any thoughts would be appreciated.
It is well worth it to sell life insurance as part of a loan package. In fact for commercial loans where the business relies on the business owner as a person, it is a very good idea. For instance, Joe Scmhoo Plumbing and Contracting business, sole ower. Joe drops off a roof into a cement mixer and the business is kaput too.
You cannot require life insurance on consumer loans.
When I was a loan officer I would often require life insurance as a secondary or third backup, especially when I wasn't too interested in collecting the first collateral if the loan were to default. I would either write a new or additional policy (preferrable) or assign an old policy if the client was uninsurable. If it was a new policy, I would offer to write the cost of the premiums into the total commercial loan. When the loan was over, the client still had the policy. However, often we would be writing a new loan and just continue the assignment.