Employer wants to take a Coporate Owned Life Insurance on me


I am a registered Architect and I work for a small sole proprietor firm. The firm has about 10 employees, mostly experienced interns and project managers.

Recently, my boss hinted that he needed my consent to take out a corporate owned life insurance policy on me and 2 other colleagues. Prior to that conversation, I had no idea what a COLI policy meant. In a nutshell it means my boss gets paid if I die. Here is the kicker, the policy does not terminate if I quit my job. In other words, as long as my boss keeps paying the premium, he or his heirs will eventually get paid when I die.

I have done some research and a lot of corporate America actually use the COLI policies as a means to fund their employee benefits. Unlike the big corporations though, this firm does not have any sort of pension plan. 

Has anyone here been in this position?

Oct 25, 15 11:34 pm


Sounds like the boss is looking to find a way to collect on that policy.... just might want to watch out for snipers, guys in crappy chewbacca costume with blow tubes for blow darts and so on and so on. In case they try to architect an accident.

Seriously, it is probably not as nefarious as it sounds.

Oct 26, 15 12:14 am  · 

We took out what was called “Key Man Insurance" on principals….needed protection if a partner or key person dies and you chance losing their contacts and firm contributions.

Holding it in perpetuity sounds strange, but hell, just find some friends that don’t look healthy and see if you can get permission to take out policies on them, kinda like buying lottery tickets.

Oct 26, 15 11:22 am  · 

look into "gift of a lifetime" from oklahoma state.  they took out life insurance policies on alumn because they figured it would make them more money than investing through other more traditional methods.

i suspect in carrera's case the insurance policies were established more to protect the continuation of the firm rather than just to make money.  that might be a requirement in some disaster recovery plans, but i can't speak to that for certain.

you have to kind of wonder though.  do you want to be worth more dead than alive?  maybe your boss isn't making enough money working for a living and he decided it would be easier to just wait for a few people to die off?

Oct 26, 15 11:40 am  · 

In the investment world this is know as a 'naked short'. Capitalism at it's finest!

Oct 26, 15 11:53 am  · 
boy in a well

a friend funded his future operations via key man; its like why not play every hand the system lays out. Was legit tho:  new, younger partner to much older partner's operation. 

Oct 26, 15 3:40 pm  · 

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