What Does Corporate-owned Life Insurance Mean?
Corporate-owned life insurance (COLI) is a group life insurance taken out on the lives of employees who are vital to the company’s operations. The company pays the insurance premiums and is also the primary beneficiary after the death of the person or their retirement. The organization can either be a partial or a total beneficiary.
Insuranceopedia Explains Corporate-owned Life Insurance
An organization would purchase corporate-owned life insurance to protect against employee benefit liabilities or their replacement upon unexpected death. Usually meant to cover key employees, it can be structured in different ways to suit the organization. The covered employees usually sign the contract at the beginning of their employment contract and must be notified of the company’s intention to insure them, the amount of coverage, and whether the company is a partial or total beneficiary.