The Pension Protection Act of 2006 includes new rules applicable to
employers who obtain life insurance policies, also known as corporate
owned life insurance, or “COLI,” on the lives of one or more
of its employees. Under the new rules, the following requirements must be
satisfied if the employer desires to exclude the policy proceeds from its
income upon the death of the employee. Failure to satisfy the
requirements will result in the policy proceeds being included in the
employer’s income (except to the extent of the premiums paid by the
employer).
