Corporate-owned life insurance (COLI), is life insurance on employees' lives that is owned by the employer, with benefits payable either to the employer or directly to the employee's families. Pejorative names for the practice include janitor's insurance and dead peasants insurance, the latter of which refers to the plot of Nikolai Gogol's novel Dead Souls.^[1] When the employer is a bank, the insurance is known as a bank owned life insurance (BOLI).^[2]

COLI was originally purchased on the lives of key employees and executives by a company to hedge against the financial cost of losing key employees to unexpected death, the risk of recruiting and training replacements of necessary or highly-trained personnel, or to fund corporate obligations to redeem stock upon the death of an owner. This use is commonly known as "key man" or "key person" insurance. Although this article refers only to practice and policy in the United States, key person insurance is used in other countries as well.

Primarily in the 1990s, some companies aggressively insured a broad base of employees, as part of general hiring requirements, and never without the employee's written consent. During the hiring process, employees sign many documents, including life, health and welfare coverage agreements or applications for insurance. Additionally, up until 1984, certain premiums for life insurance were leveraged and deducted, in essence creating a transaction with highest possible tax benefits. Even today, when a COLI plan's death benefits are paid to an employees family directly, the company paying the premiums can deduct them from corporate profits and earnings legally. In 2006, the U.S. Congress and the Internal Revenue Service (IRS) set some guidelines and limits on the installation and administration of COLI and BOLI.

Today, COLI is most common for senior executives of a firm, but its use for general employees is still sometimes practiced, primarily as a real economic transaction for Voluntary Employee Benefit Associations (VEBAs).

 Continue reading at:  https://en.wikipedia.org/wiki/Corporate-owned_life_insurance

Now to get to my reason for posting this article, it gets a lot more interesting, read on.

 Although I had heard of “dead peasant” or "janitor" insurance policies or, as they known more euphemistically, corporate-owned life insurance (COLI) policies, Arianna Huffington’s reference to them in her review of Michael Moore’s new film, Capitalism: A Love Story, prompted me to do some research. And what I learned, among other things, is that protracted litigation about the validity of several hundred thousand policies involves three corporations whose names you won't be surprised to hear: Wal-Mart, Hartford Life Insurance Company, and AIG Life Insurance Company. But before I discuss that lawsuit, let me provide some background.

In its simplest form, a dead peasant policy is a life insurance policy that a company takes out on an employee, usually without the employee's knowledge or permission. When the employee dies, his or her employer receives the life insurance benefits. In this post, the Contingent Fee Business Litigation Blog explains how the policies got their name. An earlier post contains a link to an article in the National Law Journal that discusses issues involved in COLI litigation. Also, Mike Myers, whose firm publishes the blog, recently launched a site that answers questions about the policies.

Jere Beasley, in his eponymous blog, describes some of the litigation about the policies and points out that in 2006, Congress passed the Pension Protection Act, which requires employers to obtain the consent of their rank-and-file employees who are insured under a COLI policy.

Continue reading here:  http://www.wvbusinesslitigationblog.com/2009/09/articles/insurance/...

Winn Dixie Stores bought life insurance policies on approximately 36,000 of its employees, without their knowledge or consent, and named itself as the policies’ beneficiary. The insurance brokerage firm that placed the policies prepared two memos describing the deceased employees as “Dead Peasants.” These memos were part of the court’s record in a lawsuit in which the United States Court of Appeals for the Eleventh Circuit held that Winn-Dixie’s policies were a sham transaction for federal income tax purposes. The memos were later used by reporters such as Ellen Schultz and Theo Francis of the Wall Street Journal and L.M. Sixel of the Houston Chronicle and incorporated into articles about this type of insurance.

Because a company’s purchase of insurance policies is not a public record, it is virtually impossible to know every company that invested in policies on employees’ lives. The following companies, however, are believed to have been named as the beneficiary of life insurance policies on employees:

• ADAC Laboratories
• Advanced Telecommunication Corp.
• Aeroquip Vickers Inc.
• Alabama Power Co.
• Alfa Corp.
• Allegheny Technologies Inc.
• Allergan Inc.
• Allfirst Financial Inc.
• American Business Products, Inc.
• American Electric Power
• American Express Co.
• American Greetings Corp.
• American Management Systems Inc.
• American Seafoods Group LLC
• Ameritech Corp.
• Amerus Group Co.
• Anadarko Petroleum Corporation
• Appalachian Power Co.
• Arch Chemical
• Aristech Chemical Corp.
• AT&T Communications
• Atlantic Richfield Co.
• Avery Dennison Corp
• Avon Products Inc.
• B. F. Goodrich Company
• Ball Corporation
• Bank Boston
• Bank Of America
• Bank One Corp.
• Barnett Banks Inc.
• Bassett Furniture Industries Inc.
• Be Aerospace Inc.
• Bear Stearns Companies
• Bellsouth Corporation
• Boise Cascade Corp.
• Boston Company
• Boston Federal
• Bristol-Myers Squibb Company
• Camelot Music, Inc.
• Carolina Power & Light Co.
• Carpenter Technology Corp.
• Catskill Financial Corp.
• Central Power & Light Co.
• Ch2m Hill Companies Ltd.
• Charming Shoppes, Inc.
• Checkfree Corp.
• Chemical Banking Corporation
• Citibank, N.A.
• Citizens Bank
• Clark Inc.
• Clorox Company
• CNF Inc.
• Coca-Cola Company
• Columbus Southern Power Co.
• Commercial Intertech Corp.
• Compass Bank (Florida & Alabama)
• Computer Technology Associates Inc.
• Consolidated Natural Gas Co.
• Consolidated Rail Corporation
• Cox Enterprises, Inc.
• CTA Inc.
• Cymer Inc.
• Diamond Shamrock Inc.
• Diebold Inc.
• Dime Bancorp Inc.
• Dow Chemical
• Earle M. Jorgensen Co.
• Eastman Kodak Company
• Eaton Corp.
• ECC Capital Corp.
• Enserch Corp.
• F&M Bancorp
• FiberMark Inc.
• Figgie International Inc.
• Fina Oil & Chemical Company
• First Bank System Inc.
• First Commonwealth
• First Midwest Bancorp Inc.
• Fleet Bank
• FleetBoston Financial Corp.
• Flightsafety International Inc.
• Frontier Bank
• Fulton Financial Corp.
• GATX Corporation
• Georgia Power Co.
• GNC Corp.
• Great Plains Energy Inc.
• GTE Corporation
• Gulf Power Co.
• HCR Manor Care Inc
• Hechinger Company
• Heritage Commerce Corp.
• Herman Miller Inc.
• Hershey Foods Corporation
• Hillenbrand Industries, Inc.
• Hosiery Corporation of America
• Houghton Mifflin
• Household Finance
• Hovnanian Enterprises Inc.
• Hughes Supply Inc
• ICI Americas, Inc.
• Idaho Power Company
• IKON Office Solutions Inc.
• Indiana Michigan Power Co.
• Integra Bank Corp.
• Intermark Inc.
• Iowa First Bancshares Corp.
• Iroquois Bancorp Inc.
• J Jill Group Inc.
• JP Morgan Chase & Co.
• Kansas City Power & Light
• Kansas Gas & Electric Co.
• Keithley Instruments Inc.
• Kentucky Power Co.
• Keycorp Ohio
• Kimberly Clark
• Korn Ferry International
• Laser Master Int’l. Inc.
• Linens N Things Inc.
• LKQ Corp.
• Louisiana Pacific Corp.
• Manor Care Inc.
• Marriott International Inc.
• McDonnell Douglas Corp.
• Media General Inc.
• Medicalcontrol Inc.
• Menasha Corporation
• MidAmerican Energy Co.
• Miix Group Inc.
• Mississippi Power Co.
• MNC Financial Inc.
• Mueller Industries Inc.
• National City Corporation
• NationsBank
• Nestle Enterprises
• Norfolk Southern Corp.
• Norfolk Southern Railway Co.
• Northern States Power Co.
• Ohio Power Co.
• Old National
• Olin Corporation
• Owens & Minor Inc.
• PacifiCorp
• Panera Bread Co.
• Panhandle Eastern Pipe Line Company
• Parker Hannifin Corp.
• Penn Treaty American Corp.
• Penns Woods Bancorp Inc.
• Phibro Animal Health Corp.
• Philipp Brothers Chemicals Inc.
• Phoenix Companies Inc.
• Pinnacle Financial Services Inc.
• Portland General Electric
• Potlatch Corporation
• PPG Industries
• Procter & Gamble Company
• PSS World Medical Inc.
• Public Service Co. of New Mexico
• Public Service Co. of Oklahoma
• Public Service Enterprise Group
• Questech Inc.
• R. R. Donnelley & Sons Company
• Ruddick Corp.
• Ryder System Inc.
• Sallie Mae (Stud Ln Mktg Assoc.)
• Savannah Electric & Power Co.
• Sequa Corp.
• Service Merchandise Co., Inc.
• Shearson Mortgage
• Sherwin-Williams
• Sky Chefs
• Smart & Final Inc.
• Smith Barney
• Sonoco Products Co.
• Southwest Bank
• Southwest Water Co.
• Southwestern Bell Corp.
• Southwestern Electric Power Co.
• Southwestern Public Service Co.
• Star Banc Corp.
• Stauffer Management Company
• Steelcase Inc.
• Sturgis Bancorp Inc.
• Summit Bank of N.J.
• Swank, Inc.
• Tellabs Inc.
• Tenet Healthcare Corp.
• Texas Eastern Transmission Corp.
• Tompkins Trustco Inc.
• TXU Corp.
• TYCO International
• UniFirst Corp.
• Union Bank
• United National Bancorp
• Urocor Inc.
• Vineyard National Bancorp
• W. R. Grace & Company
• Wachovia Corporation
• Walgreen Company
• Wal-Mart Stores
• Walt Disney
• Wang’s International, Inc.
• Wells Fargo, N.A.
• West Coast Bancorp
• West Texas Utilities Co.
• Westar Energy Inc.
• Western Aire Chef Inc
• Western Resources, Inc.
• Westpoint Pepperell
• Winn Dixie
• Winnebago Industries Inc.
• Woolworth Corporation
• Xcel Energy Inc.
• York Water Co.
• Zale Corp.

Do you work for any of these companies? If so I would suggest you look into what you can do to change who gets the benefits if you die.