What Is Employer Owned Life Insurance? 
The corporation is either the total or partial beneficiary on the policy , and an employee or group of employees , owner or debtor is listed as the insured -LRB- s -RRB- . Fundamentally , COLI differs from group life insurance policies that are typically offered to most or all of the employees in a company , because this type of insurance is designed to protect the employees and their families and not the company itself . COLI can be structured in many different ways to accomplish many different objectives . One of the most common is to fund certain types of nonqualified plans , such as a split-dollar life insurance policy that allows the company to recoup its premium outlay into the policy by naming itself as the beneficiary for the amount of premium paid , with the remainder going to the employee who is the insured on the policy . Other forms of COLI include key person life insurance that pays the company a death benefit upon the death of a key employee , and buy-sell agreements that fund the buyout of a deceased partner or owner of a business . In many cases , the death benefit is used to buy some or all of the shares of company stock owned by the deceased -LRB- such as with a closely-held business -RRB- . COLI is also frequently used as a means of recovering the cost of funding various types of employee benefits . 