Corporate-owned Life Insurance

What Does Corporate-owned Life Insurance Mean?

Corporate-owned life insurance (COLI) is a type of group life insurance purchased on the lives of employees essential to a company’s operations. The company pays the insurance premiums and is the primary beneficiary upon the employee’s death or retirement. The organization can be either a partial or total beneficiary of the policy.

Insuranceopedia Explains Corporate-owned Life Insurance

An organization purchases corporate-owned life insurance to safeguard against employee benefit liabilities or to cover the replacement costs of key employees in the event of unexpected death. Typically designed to protect essential personnel, this insurance can be structured in various ways to meet the organization’s needs. Covered employees usually sign the contract at the beginning of their employment and must be informed of the company’s intention to insure them, the amount of coverage, and whether the organization will be a partial or total beneficiary.