You asked whether Connecticut allows corporate employers to purchase life insurance on their employees.

Yes, Connecticut permits corporations to purchase life insurance on their employees. Unlike "key" employee or executive life insurance where the corporation buys insurance only on the lives of its senior managers, corporate owned life insurance (COLI) covers rank and file employees. Under the policy, the corporation is the policy owner, premium payer, and beneficiary.

By law, life insurers must file with and get the insurance commissioner's approval for each life insurance policy and annuity contract they deliver or issue for delivery to any person in the state (CGS § 38a-430).

Under this authority, Connecticut regulates COLI transactions. Through an administrative rule, the Insurance Department set three conditions on the approval of COLI filings. First, employees covered by the policy must give their consent. Second, the insurance must end when the employee's employment ends whether through retirement, resignation, or termination, unless the employer has a continuing financial obligation to the employee like the payment of vested retirement or medical benefits. Third, the employer must give the Insurance Department written assurance that it acknowledges the first and second requirements and will comply with them.

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