Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Jun 30, 2021

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The Brief

  • Corporate owned life insurance is available to companies who fall within certain specifications
  • You can find the corporate owned life insurance rates that best work within your budget through research
  • Discover if you should buy corporate owned life insurance for your key employees by reading the important information about its rules and regulations

Life insurance is something everyone should have. Whether you buy it yourself, or you get it through employee benefits, life insurance is essential. We understand you might have some questions about life insurance and we are here to help.

There are many advantages to choosing affordable corporate owned life insurance for your key employees, CEOs, and major shareholders.

Use our free tool below and compare corporate owned life insurance quotes today by entering your ZIP code above.

What is corporate owned life insurance?

Corporate owned life insurance, also known as company owned life insurance, is a policy taken out by a company on one or more critical employees.

If the covered employee dies, the company would then receive the death benefit.

In turn, the company would redistribute those funds for recruiting and training replacements of highly trained personnel or to redeem stock upon the death of an owner.

This unique way of insuring both high-level employees and the company they work for has raised the question, “Is corporate owned life insurance ethical?”

In the past, some companies exploited loopholes and caused stricter enforcement of insurance policy regulations.

The Internal Revenue Service now requires that companies meet rigid conditions to receive the death benefit and tax-free status of said benefit.

Additionally, the company must notify the employee in writing and obtain their written consent of the policy before purchasing.

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How much is corporate owned life insurance?

As with any other type of life insurance policy, corporate owned life insurance rates will vary depending on your specific needs.

Options typically available for these types of policies include general, or separate accounts. It is important to discuss both of these with potential policy providers, as they each have advantages and disadvantages which could impact your decision.

Should I buy corporate owned life insurance?

If you are considering this option for your business, you may want to look at potential insurance companies that could handle your specific needs.

Your business needs might be small compared to others. However, if you are a more considerable-sized company, you will likely need the resources provided by larger insurance companies, such as the ones below:

Top Five Life Insurance Companies By Market Share and Their A.M. Best Ratings
CompanyMarket ShareA.M. Best Rating
Northwestern Mutual8.2%A++
Lincoln National5.8%A+
New York Life5.7%A++
MassMutual4.8%A++
Prudential4.5%A+
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These types of policies are aimed to minimize a company’s tax burden, generate after-tax net income, fund employee benefits, and assist in covering the expenses of replacing a lost key employee.

Corporate owned life insurance deferred compensation is also something to consider.

Gains on policy cash value are tax-deferred and could be income tax-free if held until the insured’s death.

Many companies may qualify for corporate owned life insurance tax treatment if they insure no more than the top 35% of their employees, and meet other minimum requirements.

A corporate owned life insurance policy may be something your business is currently considering.

If you have spoken with a financial advisor and compared the various options available to you, the next step is finding a corporate owned life insurance company to represent your interests.

If you’re looking to buy corporate owned life insurance, enter your ZIP code below to compare different life insurance rates in your area today.