How Does Company Owned Life Insurance Work?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Company owned life insurance (COLI) is taken out on key employees in the company. The company is the owner, payer, and beneficiary of these policies. If the key employee should pass away, the company has funds to recruit a new employee to replace them and to carry on operations during that transition time.

    If the Corporate Owned Life Insurance is a cash value policy. it can be used as an informal funding vehicle for a nonqualified deferred compensation (NQDC) plan.
    Answered on July 26, 2013
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