For organizations with employer-owned life insurance, which is apolicy owned by an entity that acts as the beneficiary, there isthe potential for major tax savings. But employers must be surethey are following all of the regulations in order to see that taxadvantage, says Russell Hall, senior regulatory adviser at TowersWatson, a global professional services firm in New York City.

Under the notice and consent requirements in the PensionProtection Act of 2006, an employer must notify the employee inwriting that it intends to take out a life insurance policy on hisor her life, and the maximum amount of the death benefit that couldbe insured at the time the contract is issued must be listed, saysTerry Headley, president of Headley Financial Group, a financialservices group in Omaha, Neb. 

The employer is also responsible for informing the employee inwriting that the employer is the sole or partial beneficiary of anydeath benefits, and the employee must consent to the EOLI policy inwriting. Each of these requirements must happen before the policyis issued.