I have a life insurance policy through my employer. My concern is that if I die, the face value might become part of my estate because I own the policy. How do I protect my wife so that estate taxes don't grab a chunk of the benefit payment?
Prudent of you to be concerned, but your wife will not be left holding a bag emptied by estate taxes if you have deemed her the beneficiary. All property that you leave to your wife, including insurance proceeds, is not subject to estate taxes. Not only that, but the benefits will pass immediately to her, without the delays of probate.
If, for some other reason, you want to transfer ownership of the policy -- assuming you have the right to do so under its terms -- you can simply give the policy to another person, or you can create a life insurance trust and transfer ownership to the trust. Whenever you change ownership of an insurance policy, you must do so in accord with the forms the company provides for that purpose.
For detailed information on life insurance as part of your estate plan, see Plan Your Estate, by attorney Denis Clifford (Nolo).