Some companies will take out life insurance on their key employee(s) so that the business would have the resources to keep operating while trying to replace that employee(s), in the event of their passing. This is called Key Man or Key Person Insurance.
Corporate Owned Life Insurance (COLI, for short) became popular during the 1980's as a way to cover the entire pool of employees due to the tax shelter status given these policies by the IRS. Subsequent reforms give COLI tax favorability only if such coverage is purchased on top wage earners and if they are notified of the policy in advance, and further restrictions are in the pike. As such, life insurance policies that cover all employees in the business are much less common.
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Corporate Owned Life Insurance (COLI, for short) became popular during the 1980's as a way to cover the entire pool of employees due to the tax shelter status given these policies by the IRS. Subsequent reforms give COLI tax favorability only if such coverage is purchased on top wage earners and if they are notified of the policy in advance, and further restrictions are in the pike. As such, life insurance policies that cover all employees in the business are much less common.