You don't buy life insurance because you're going to die,
but because those you love are going to live!
The first insurance company in American colonies was formed in Charleston, S.C., in 1735, but it offered only fire insurance at first. It didn’t add life insurance until 1760.
In 1837 there was a panic that resulted in a financial crisis that spurred a shift toward mutualization for life insurance companies. Between 1838 and 1849, only one life insurance company was considered a public company and raised capital based on it's stock. Around 17 mutuals, requiring minimal initial capital, were chartered.
BREAKING DOWN 'Bank-Owned Life Insurance - BOLI'
Banks use BOLI contracts to fund ever-increasing employee benefits at a much cheaper rate. The process works like this: the bank sets up the contract, and then makes payments into a specialized fund set aside as the insurance trust. All employee benefits that need to be paid to particular employees covered under the plan are paid out from this fund.
All premiums paid into the fund, as well as all capital appreciation, are tax free for the bank. Therefore, banks can use the BOLI system to fund employee benefits on a tax-free basis.
Since the gains and payouts from the life insurance policies are both tax-free, this is a creative tax-free way for the banks to fund their employee benefit programs, while also helping to offset the potential loss of a valuable executive's services.
One of the biggest benefits is that BOLI policies produce far superior returns than traditional bank investments, such as municipal bonds, 5- and 10-year Treasuries, and mortgage-backed securities. And, the growth in the cash value of the policies, as well as any death benefits paid out are completely tax-free.
Furthermore, BOLI policies have low risk levels that fit into banks' standard investment criteria. They also help to diversify the bank's investment portfolio, and immediately boost the bank's return on equity (ROE) and return on assets (ROA)
Life Insurance has been considered a new asset class for tax free safe money returns.