Legal Definitions - corporate-owned life insurance

Corporate-owned life insurance is a type of life insurance policy that a company buys on an employee's life, with the company named as the beneficiary. It is also known as COLI.

For example, if a company buys a COLI policy on one of its executives, the company will receive the death benefit if the executive dies. The company can use the death benefit to cover the costs of finding and training a replacement or to offset the financial impact of losing a key employee.

COLI policies are controversial because some people believe that companies should not profit from the death of their employees. However, others argue that COLI policies are a legitimate way for companies to manage risk and protect their financial interests.