On my '91, that light is a warning light for the SRS, i.e. the air bag. I doubt your '88 is has an air bag, so I can't be much help. If your car did not come with an owner's manual, you might want to call Volvo at 1-800-25-Volvo and get a manual for your year model. They come in handy from time to time (to answer questions like this, etc.).

Back to the service light, that's how they work. They automatically come on every 5000 miles, and stay on for two minutes after the car is started. This light is purely a reminder to change the oil -- nothing more. I had an '88 740 where you literally had to reach in behind the speedometer to reset the reminder light. What a pain! Anyway, it surely will not hurt a thing to remove the bulb. Just set up your own system for remembering to change the oil at regular intervals.