Corporate-owned life insurance
From The Art and Popular Culture Encyclopedia
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Corporate-owned life insurance (COLI), also known as dead peasant life insurance or janitors insurance, is life insurance on employees' lives that is owned by the employer, with benefits payable to the employer.
Origin of term "Dead peasant" to refer to COLI
COLI is sometimes referred to as "dead peasant" life insurance, by reference to the 1842 novel Dead Souls by the Russian novelist Nikolai Gogol. Before the emancipation of the serfs in Russia in 1861, they were regarded as chattel, and inventoried as "souls". These "souls" could be bought, sold and used as collateral for loans and mortgages. In the novel, the protagonist Chichikov travels Russia seeking to purchase "dead peasants", "souls" who had been reported in a previous census but who had since died. In purchasing the "dead souls", he will relieve the previous owner of the tax burden, while accumulating a number for himself that will allow him to obtain loans with them as collateral.
The term entered popular usage in America journalistic coverage of some court cases involving COLI in the mid- to late-1990s, and more prominently via Michael Moore's 2009 movie Capitalism: A Love Story, which had a segment criticizing COLI. In the court record of the IRS lawsuit decided in 1999 against Winn-Dixie for use of COLI for tax avoidance, several memos written by the insurance brokerage firm handling the policies between Winn-Dixie and AIG had described the practice under the title of "Dead peasants".
See also
When there is no "insurable interest" between the policy owner and the insured.
