Health and Life Insurance

Answer: C - Corporate owned life insurance, or COLI, is life insurance on employees' lives that is owned by the employer. In most cases, these policies are taxed as if they were individually-owned life insurance. This means that premiums are not deductible and proceeds are not taxable. (This is true regardless of whether the benefits from COLI are paid to the employer or directly to an employee's family). This tax treatment as individually-owned policies is also the case if the life insurance is being used for funding of key person benefits and/or a buy-sell agreement.