Corporate owned life insurance (COLI) has been used for many years, but it's purpose has fluctuated over the years. It began, and mainly is now, as a way to provide necessary funding to a business when a key employee died. The death benefit allows the employer to recoup some of the loss of earnings incurred when a productive employee dies, and provides funds for recruiting and training a replacement.
For some years, it was a popular practice for an employer to take out life insurance on all employees. Because it covered even the most low paying jobs, this type of insurance was dubbed the nickname, "dead peasant's life insurance". However, tax advantages have been tightened up on COLI, and now employees must give their consent for their employer to take out this type of policy on them. So taking out life insurance on all employees is not as popular as it used to be.
The answer to your question is, yes, your employer can take out life insurance on you, IF you give your consent.
Licensed Life Agent, Life and Finance/ 50 States, New York
Yes, many businesses do take out insurance on their employees. The coverage is paid by the employer. Upon the employee's retirement the benefits are paid to the beneficiary in time of death. There are coverages in the event of a lead employee or corporate head dies suddenly the company get the benefits to cover costs related.
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
Yep.
Are you a key employee?
Perhaps you are an executive with a high level of responsibility.
Perhaps you are a technician with specialized expertise.
Perhaps you are a sales person who brings in a significant amount of revenue.
In all these cases, your loss would probably create big problems for your employer.
Employees might lose morale.
Clients might fear an interruption in service.
Vendors might worry about getting paid.
But if your employer had life insurance on you, then they would collect sufficient money to keep moving forward. To get everybody paid. To continue service. To hire a capable replacement.
Many businesses fall apart because the key person tragically dies, and they cannot recoup from his or her loss.
However: with sufficient life insurance coverage, the show can and will go on.
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For some years, it was a popular practice for an employer to take out life insurance on all employees. Because it covered even the most low paying jobs, this type of insurance was dubbed the nickname, "dead peasant's life insurance". However, tax advantages have been tightened up on COLI, and now employees must give their consent for their employer to take out this type of policy on them. So taking out life insurance on all employees is not as popular as it used to be.
The answer to your question is, yes, your employer can take out life insurance on you, IF you give your consent.
Are you a key employee?
Perhaps you are an executive with a high level of responsibility.
Perhaps you are a technician with specialized expertise.
Perhaps you are a sales person who brings in a significant amount of revenue.
In all these cases, your loss would probably create big problems for your employer.
Employees might lose morale.
Clients might fear an interruption in service.
Vendors might worry about getting paid.
But if your employer had life insurance on you, then they would collect sufficient money to keep moving forward. To get everybody paid. To continue service. To hire a capable replacement.
Many businesses fall apart because the key person tragically dies, and they cannot recoup from his or her loss.
However: with sufficient life insurance coverage, the show can and will go on.