How does a person know if he or she is covered by a policy?

Life insurance is definitely one of the most tax-advantaged platforms in existence. The policy has been a financial savior to millions of people around the world with significant percentage of this fraction failing to understand the fact that not all life policies are purchased by individuals. Some policies, for example Corporate-Owned Life Insurance popularly known as “dead peasant” insurance, are bought by companies including institutions who use this insurance policy for various reasons.

Unlike Group Life Insurance where only employees are insured, Corporate-Owned Life Insurance (COLI) is designed to protect both the employees and the company itself. The extra advantage is that COLI can specifically be structured to accomplish certain objectives. For example; the “dead peasant” insurance policy can be structured to include key employee’s such as management staff life insurance. Such that in case of death, the company will receive death benefit including buy-sell agreements to fund the buyout of the staff member.

So how does a person know if he or she is covered by a policy?

A Corporate-Owned Life Insurance policy can only be bought on the highest compensated third of employees and anyone named as the insured must receive written notice prior to the policy purchase showing the corporate intent of insurance as well as the amount of coverage. The staff member will also receive written notice if the company is total or partial beneficiary of the insurance policy. Thanks to the COLI initiative, both parties can be compensated by tax-free policies, which will definitely add value to the actual figure.

Corporate-Owned Life Insurance tax rules are fairly complex and also vary depending on the state where the company is situated. This insurance helps companies accomplish many objectives therefore business owners as well as employees are advised to consult expert financial advisors who will then break down the complex rules including taxation involved with “dead peasant” policy.