How Does Company Owned Life Insurance Work? 
Company owned life insurance -LRB- COLI -RRB- 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 -LRB- NQDC -RRB- plan . 