It really depends on what the status of ex-employees are - if you are required to pay their family pension benefits, health benefits, etc. if they die, then continuing to insure them might make sense.
In terms of the law being "abused" one could argue that it already is - insofar as the tax code is being used for a purpose which was never intended.
One could argue alternately that the tax code itself is abusive, since it imposes a tax on company earnings when they are reported, again when dividends are taxed and arguably a third time, when capital gains are taxed.
If companies could invest earnings without having to fear capital gains taxes, no policy would ever have been taken out in the first place.
I understand that dividends will be exempted from corporate tax, and honestly I wish all corporate "income" would be exempt. Taxing fictionalities like corporations creates corruption -- corporations don't vote, don't serve time and don't get drafted. A corporation has ONLY one direct way to secure indemnity from nefarious tax schemes -- bribery. (And I have yet to see a corporation serve on a jury.)
It really depends on what the status of ex-employees are - if you are required to pay their family pension benefits, health benefits, etc. if they die, then continuing to insure them might make sense.One of the most easily envisioned abuses of this type of insurance is that it increases the incentive to cut back on health benefits for retired employees. Save two ways--less cost now, plus income when they die earlier.