Corporate Ownership Of Life Insurance - COLI


DEFINITION of 'Corporate Ownership Of Life Insurance - COLI'

Insurance policies taken out by companies on their employees, with death benefits payable to these companies rather than to the insured person's family or heirs. Corporate ownership of life insurance (COLI) or corporate-owned life insurance refers to insurance obtained and owned by a company on its employees, where it pays all of the premiums and receives all of the benefits.

COLI is generally used to protect a company from the costs arising from the unexpected death of an employee, as well as to fund employee benefits. Unlike "key man" insurance, which refers to company-owned insurance on directors and top executives, COLI may be taken out on any employee. For this reason, it is sometimes derisively referred to as "janitor's insurance" or "dead peasant insurance."

BREAKING DOWN 'Corporate Ownership Of Life Insurance - COLI'

When the employer of a corporate-owned policy is a bank, the policy is referred to as "Bank-Owned Life Insurance" (BOLI).

COLI is separate and distinct from employee benefit plans, since the only beneficiary is the company, and not the employee or the employee's family. COLI policies provide the same benefits to the owner as other life insurance products - death benefits are not taxable, and investment earnings on insurance premiums can grow tax-free within the policy (unless it is surrendered before the insured party's death).

COLI/BOLI policies have drawn criticism from the media and other parties, which question the ethics of companies benefiting financially from the death of ordinary employees.

  1. Death Benefit

    The amount on a life insurance policy or pension that is payable ...
  2. Life Insurance

    A protection against the loss of income that would result if ...
  3. Key Person Insurance

    A life insurance policy that a company purchases on a key executive's ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  6. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the ...
Related Articles
  1. Home & Auto

    A Look At Single-Premium Life Insurance

    Want to provide for your dependents and finance your own long-term care? Learn more here.
  2. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  3. Home & Auto

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  4. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  5. Options & Futures

    Benefit Issues When Your Employer Goes Bankrupt

    There are some safeguards in place to ensure that health benefits don't just disappear when a plan is canceled.
  6. Insurance

    How Life Insurance Works in a Divorce

    Learn the implications of life insurance in a divorce situation, and identify the steps you should take to ensure your policies are sorted out post-divorce.
  7. Insurance

    6 Reasons To Avoid Private Mortgage Insurance

    This costly coverage protects your mortgage lender - not you.
  8. Entrepreneurship

    Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
  9. Insurance

    Cashing in Your Life Insurance Policy

    Tough times call for desperate measures, but is raiding your life insurance policy even worth considering?
  10. Insurance

    Avoiding The Modified Endowment Contract Trap

    To avoid MEC status, flexible-premium policies must cap the amount that can be paid into the policy over a period of seven years.
  1. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  2. Does renters insurance cover storage units?

    An all-perils renters insurance policy provides coverage for the contents of storage units. Most policies limit the amount ... Read Full Answer >>
  3. Does renters insurance cover personal injuries?

    Renters insurance provides two main forms of coverage – liability and contents insurance – and they are offered together ... Read Full Answer >>
  4. Does renters insurance cover flooding?

    An all-perils renters insurance policy does not cover damage from a flood. Consumers sometimes confuse a pipe bursting with ... Read Full Answer >>
  5. Does renters insurance cover mold?

    An all-perils renters insurance policy typically provides a low set amount of coverage for damage caused by mold as long ... Read Full Answer >>
  6. Does renters insurance cover car theft?

    An all-perils renters insurance policy does not cover the theft of a vehicle. It does, however, provide coverage for personal ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center