Jul 31
What is corporate owned life insurance (COLI)?
Businesses use life insurance to protect against financial uncertainty and secure their employees’ futures. Business life insurance, or corporate-owned life insurance (COLI), has served companies and employees for more than 80 years.
The ACLI (American Council of Life Insurers) provides a good definition of COLI. They say, “In general, under a COLI arrangement, an employer purchases a life insurance policy or policies on the lives of specific employees. The non-deductible premiums for the coverage are paid by the employer, and in the event of a covered employee’s death, the employer retains the proceeds of the policy. State law and federal tax code direct who may be insured, how the policy may be funded, as well as limitations on deductibility and borrowing. COLI helps employers meet future financial liabilities tied to foreseeable human events; such as premature death of a key employee, benefit costs, or business succession planning. Without access to permanent life insurance at a reasonable cost, companies may not have the capital to both pay future expenses and to keep operations afloat”
More after the jump…
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