Does Your Employer Carry a “Dead Peasant” Life Insurance Policy on You?

I remember the story about Wal-Mart collecting $72,820.30 in life insurance on an employee, Karen Armatrout, who died of cancer while working at Wal-Mart.  At the time, I didn’t think to look deeper to see if this was a common practice among big corporations.

A Texas attorney, Michael D. Myers, sued Wal-Mart over the Karen Armatrout case and it was dismissed because it failed to reach the limit for a civil complaint to go before a federal judge.  However, Michael D. Myers had won a previous settlement in Oklahoma in a class action law suit brought by family members of the deceased Wal-Mart employees…..the settlement in OK was $5.1 million.¹  But, lawsuits appear to be few and far between.

Corporations Profiting on Employees’ Deaths

But, what’s going on?  Corporations are lining their pockets off the life insurance they take out on employees who die.

Some of the companies who engage in this practice are:  Wells Fargo, Bank of America, JP Morgan Chase, Dow Chemical, Procter & Gamble, Wal-Mart, Walt Disney and Winn-Dixie.  They carry policies that amount in the BILLIONS.  “The Wall Street Journal reports that Bank of America and Wells Fargo both have $17 billion each in these life insurance policies. Chase has $11 billion.”²

Dead Janitors and Dead Peasants

To add insult to injury, the policies are nicknamed dead janitors or dead peasants insurance AND the insurance is used as a tax dodge….not to mention the benefits are used to pay bonuses to key executives.

Broad-based or janitors policies that insure rank-and-file workers. Here the purpose is basically profit. The life insurance proceeds are tax-free. The policies have an investment component that allows companies to earn tax-deferred returns while the employee is still alive. And, of course, companies can take out tax-free loans on the policies. All these gains and income are used to fund operations, pay for executive compensation or boost other benefits. SOURCE

I think many, if not most, American workers have experienced a shifting in the attitudes companies have toward it’s workers.  Employers demand more and more and give less and less. Health benefits slashed, one employee expected to do the work previously done by 3 employees, pressure to not take vacation days, the list is pretty endless.  I remember my  husband sitting in a meeting at work about 7 years ago in which the employees (Executive Directors, no less) were told that no longer did God come first in their lives, nor did their families come first in their lives, the JOB would come first in their lives.  My husband quit less than 6 months later.

And by the way, we the American taxpayers, subsidize this special tax break that funnels tax-free income to the assholes that are named as the beneficiaries.

The Wall Street Journal graph below highlights the information:

Click to Enlarge

Click to Enlarge

Banks had a total of $122.3 billion in life insurance on employees at the end of 2008, nearly double the $65.8 billion they held at the end of 2004, according to a Wall Street Journal analysis of bank filings. Unlike other companies, banks are required to disclose their total life-insurance holdings in regulatory filings.SOURCE OF INFORMATION AND GRAPH

The Law on Company Owned Life Insurance

There are some laws to prevent these types of insurance policies, but unfortunately the law is easy to circumvent.

Most states also have advise and consent laws that technically require companies to get workers permission before buying life insurance on them. But attorney Myers said many businesses circumvent these laws by purchasing the insurance in one of the states that doesnt require notice or consent, including Delaware, Georgia, New Jersey, North Carolina, Pennsylvania and Vermont.

“Executives fly to Atlanta to meet with the insurance company and its brokers, sign some papers, get on their respective corporate jets and fly home, Myers said.

Other companies offered their workers small policies — typically $5,000 to $10,000 — as an incentive to allow larger corporate-owned policies to be issued on the workers lives. The small policies can later be canceled, even if the company keeps up the premiums on the other insurance.SOURCE

Vultures of America
800px-White-backed_vultures_eating_a_dead_wildebeest

Bank executives gather to dine.

This practice of taking out insurance policies on employees for profit is vile, immoral, insulting and an outrage.

It wasn’t enough that they outsourced our jobs to India, or enough when they cried poor and downsized us out of jobs while paying their CEO’s 500 times what the average worker makes, oh, no…..not content with that they turned into ghoulish vultures preying on our deaths.

The saddest part of the story is the likely response to this story.  No workers strikes for us….that’s too French.  No, as usual, we will sit back and take it and bemoan our lot in life while bailing out our masters as they continue to view us as peasants.

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45 Responses to Does Your Employer Carry a “Dead Peasant” Life Insurance Policy on You?

  1. kert says:

    hmmmm, I thought there was some law that prohibitted other people from taking out life insurance policies on you. Is that just in Minnesota? How are these companies getting around that?

    I guess I can see why a corporation might have a valid reason to take a policy out on someone who cost a lot to recruit. But short of that, it ought to be illegal.

    And I agree with you about corporations requiring more and more out of employees. At the same time, the government takes more and more of their money. The employee gets screwed by everyone.

    Sage Reply:

    And we the taxpayers just bailed a lot of these corporations out because of their bad business practices.

    kert Reply:

    Bad business practices AND abhorrent standards imposed on them by Congress (i.e., forcing them to make bad loans).

    But yes, I am opposed to bailouts.

    Sage Reply:

    It’s illegal in Washington unless the corporation gets written consent from the employee.
    SOURCE pdf

    Louisiana has a law governing it’s use:
    For most employees, the answer to that question would be no. Under Louisiana law, any person or organization applying for an insurance policy on your life is required to be able to show an insurable interest in you. Generally, an insurable interest would apply only in close family relationships and very specific business relationships.
    SOURCE

  2. AliSilver says:

    That’s nice, isn’t it?
    Don’t you just feel like getting a cup of
    hot chocolate and warming your feet by
    the fire and hearing more pleasant, warm fuzzy
    stories like this?

    TKs Sage ,,, I have NEVER heard of such a thing and although
    it’s shocking at first, I realize I’m not shocked. Not much
    is truly shocking at this point.
    SICKENING ! I bet the families drown in debt and bankruptcy
    while Mickey Mouse buys another St Thomas villa with the
    check !

    kert Reply:

    I don’t see what families drowing in debt and bankruptcy has to do with it.

    If families are drowning in debt, that’s there fault.

    Sage Reply:

    Hold on now…..sometimes people are drowning in debt because of MEDICAL BILLS or because the breadwinner in the family got layed off or any number of things that ARE NOT THEIR FAULT.

    kert Reply:

    If not their fault, then whose fault is it? Yes, ultimately it is their fault. It’s called living within your means, saving for a rainy day, and buying health insurance rather than cable tv and vacations.

    In any event, it’s not the fault of corporations buying life insurance on employees.

    Sage Reply:

    Wow…So everyone should have hundreds of thousands of dollars in a bank account just waiting for a medical emergency? How realistic is that? You can have health insurance and still end up going bankrupt over medical bills. I’d suggest your attitude is pretty self righteous and maybe life just hasn’t handed you the kick in the teeth some people have experienced. It’s that attitude that has pissed off a lot of people with so called “compassionate conservatives”.

    Maybe it’s my fault that I was born with a birth defect that cost me thousands of dollars in surgery, physical therapy and medication. Shame on me. Maybe it’s my fault that same birth defect prevents me from working certain jobs and working full time. Shame on me. Or maybe, just maybe, it’s not my fault and instead of being so friggin’ self-righteous you should just be thankful you haven’t fallen prey to catastrophe that you couldn’t have foreseen or prepared for.

    There is NO way to ward off any and every possibility of financial ruin for middle class and poor people.

    AliSilver Reply:

    I am saying after the death of an employee, the family may have hardships. Maybe it’s the breadwinner and/or big funeral expenses, etc etc. While the company is cashing in on the death, I just wonder if the suffering families were even aware.

    Of course some families are drowning in debt through their own actions and perpetually. I wasn’t talking about them ! :)

  3. AliSilver says:

    Now my conspiracy theory brain is working overtime and I wonder if there is any correlation between ‘end of life’ care by the medical insurance that is PROVIDED by these big companies and the amounts of their life insurance policies???????? Any idea ?

    You know ‘ don’t worry about little annie’s heart transplant, I’ve got 1million life insurance policy on her’ ?
    Surely not!

    Sage Reply:

    Are you talking about end of life counseling? That’s only counseling to tell people about living wills, etc. Nobody is advising people to just die.

    AliSilver Reply:

    No Sage. Not counseling. Just late term care. Say your granny works at Disney and has forever and they’ve got the 1mil policy on her LIFE. Also they carry her health insurance. So would the ins. co . take MORE OR LESS care at the end of granny’s life to ensure she’s getting the best care with the best odds at survival? See what I mean?

    Of course, I’d never accuse a giant corporation of putting profits before people :)

    Sage Reply:

    Oh, ok. I wasn’t sure what you were referring to. Basically it’s insurance for nursing home care, right? Providing insurance for long term care and carrying a life insurance policy on the person you provided that for might be a conflict of interest, eh?

    kert Reply:

    AliSilver — and therein lies the reason why there are laws against “people” taking out life insurance policies on you.

    I like your theory. Unfortunately it’s not that far fledged.

  4. AliSilver says:

    Fascinating subject Sage ! :) btw

    Sage Reply:

    I thought so, although it made my blood boil. Could you tell? :-)

    AliSilver Reply:

    Yes !
    It’s strange how I feel like I’m semi well kept up on things and do a lot of reading and yet sometimes up comes a topic I’ve never heard of before. Craziness !!!

    Sage Reply:

    You’re not alone.

    I find it amazing that we Americans have allowed things to slide to the point where the American worker is pretty much screwed by their employers on a consistent basis. I’ve looked at wanted ads and laughed when I got to the bottom of the ad and saw the salary for everything the employer was requiring for the job.

  5. It would seem to me that an employer would have to have the consent of the employee for such a policy to exist. I thought anytime a life insurance policy was taken out, the named person in the policy was to be notified.

    If one can show any kind of discriminatory actions against those who said no to being insured, then a huge class action lawsuit could be filed. If employees were never asked, that too should be grounds for a lawsuit.

    In my opinion, taking out a life insurance policy without notfiying the named person is either illegal, and can cause subconscious actions that can increase the likelihood of that person’s death.

    Example. You have been insured by your employer, and you don’t know about, and every year you get some kind of huge discount on certain kinds of products, like snow mobiles, skis, Jet Skis, three wheel motor bikes, guns, etc….

    If you knew there was a life insurance policy with your name attached, and you were given incentives to buy the kind of gifts that have a higher degree of “risk” when used, you would most likely be offended, and, not buy them, or be extra extra careful if you did buy them.

    Example, you are asked to work late. When finished, nobody accompanies you to your car even though it is dark out and possibly more dangerous than during the daytime.

    Example, You don’t feel well but are asked to work anyways.

    Example, there could be more of a motivation to have you work more hours so that you have less time to go to the doctors for a visit.

    Example, induce more stress because that can usually lead to an earlier death.

    Do you really want to work for someone who may believe you are worth more dead, than alive?
    .-= Alessandro Machi´s last blog ..A REQUEST/DEMAND regarding NOT publicizing Michael Moore’s Movie on your blog unless you also mention Moore’s betrayal of Hillary Clinton last year. =-.

    Sage Reply:

    When did laws ever stop them from doing what they want?

    Most states also have advise and consent laws that technically require companies to get workers permission before buying life insurance on them. But attorney Myers said many businesses circumvent these laws by purchasing the insurance in one of the states that doesnt require notice or consent, including Delaware, Georgia, New Jersey, North Carolina, Pennsylvania and Vermont.

    “Executives fly to Atlanta to meet with the insurance company and its brokers, sign some papers, get on their respective corporate jets and fly home, Myers said.

    Other companies offered their workers small policies — typically $5,000 to $10,000 — as an incentive to allow larger corporate-owned policies to be issued on the workers lives. The small policies can later be canceled, even if the company keeps up the premiums on the other insurance. SOURCE

    AliSilver Reply:

    NICE !

  6. Wizcon says:

    My Dad worked for Bechtel Corp as a project manager. Toward the end of his career, he worked on a huge project in Saudi Arabia. I remember him telling me that they insured his life because of his value to the company. It would be hard to replace him because of what I guess you would call his repoire with the citizens. He was the guy that could get the American kid out of jail for stealing a motor scooter and out of the country. The penalty for stealing was the loss of a hand.
    He also said the company matched it for benefits for his survivors though. I think the practice did start out honorably, to cover the loss of a valuable employee. Bechtel charged a lot of money per day to the Kingdom for Dad
    Wonder what Bechtel had for insurance on the 52 employees killed in Iraq working under the no bid contract Bush gave them?

    Sage Reply:

    I don’t have a problem with what Bechtel did…your father was aware of the policy and they provided matched benefits to his survivors.

    Wizcon Reply:

    Yeah, he still has it 25 yrs after retirement.

    Sage Reply:

    Wow. That’s great and really unusual in this day and age.

  7. kert says:

    Sage, that was a nice little rant, but you didn’t answer my question. If it’s not their fault, whose fault is it?

    Of course, there are people who suffer unforeseen catastrophic tragedies and therefore find themselves in debt. But those people are few and far between, and I don’t believe the poster to whom I responded to was talking about just those people.

    As for myself, you know nothing about me other than the opinions I express here. So don’t compare your situation with mine, or cast pronouncements on my lot in life, since you have no idea what I have gone through in my life.

    Get off your liberal high horse, dear. This victim horse you all have been riding on the past few decades has gotten you NOWHERE.

    Sage Reply:

    Shit happens and it’s nobody’s fault.

    I didn’t compare my situation with yours. I just told you I thought you were being self-righteous…and you were. I’m not on any high horse and I don’t consider myself a victim, never have. I just know that terrible things happen to good people and your pronouncement about how it’s all their fault makes me want to spit.

    You know what hasn’t gotten anywhere? The self-righteous, conservative bullshit you were spouting which is why Republicans have a disapproval rating of 70%….yep, 70%.

    And don’t call me dear….what patronizing horse crap.

    kert Reply:

    I didn’t say it made them bad people. I simply said it was their fault! If you spend and get in debt, it’s YOUR fault. It’s not rocket science. And it’s not the fault of those evil corporations either, even if it is because you ran into medical bills.

    I hate to break it to you, but I disapproved of the last administration myself. I could no better tolerate Bush’s bullshit than I can bear Obama’s. I think McCain would have been WORSE than Bush.

    That being said, I don’t suupose you have a source for your 70 percent stat, do you?

    Which “conservative bullshit” are you suggesting I was spouting? That people are responsible for their own behavior?

    Sage Reply:

    No, it’s not always a person’s fault that they get into debt, unless it’s their fault they choose not to die instead of getting medical attention.

    Playing a game of “gotcha” are you?

    Here’s the link: http://www.pollingreport.com/cong_rep.htm

    In some of the polls the disapproval rating is lower and some higher than 70 percent.

    kert Reply:

    Those polls certainly don’t support your argument. You said, “The self-righteous, conservative bullshit you were spouting which is why Republicans have a disapproval rating of 70%….yep, 70%. ”

    Those polls don’t say any such things. They say “70%” don’t approve of the job they’re doing, not that they disapprove of conservative policies. IN FACT, you’d have to include me in that 70% because I don’t think Republicans have the balls to act like conservatives. Conservatives, for example, don’t believe in bail outs. Also, they are opposed to the stimulus plan. Thus, conservatives would express disapproval of the short-sighted, spineless twerps who call themselves Republicans. Thus your 70% (or whatever stat you want to adopt) would include not only all the liberals, but also all the true conservatives.

    Sage Reply:

    You go ahead and split that hair.

    Sage Reply:

    LOL…conservatives don’t believe in bailouts? Gheesh…George W. Bush did the TARP.

    kert Reply:

    Oh, and Sage? that same poll that says 70% of Americans disapprove of the job Republicans are doing, says that 61% disapprove of the job DEMOCRATS are doing.

    ROFL!

    Sage Reply:

    Where’s the link?

    Democrats are still doing better than Republicans….ROFL.

  8. SOB says:

    Capitalism became immoral after the death of the Soviet Union.

  9. Loved Michael Moore’s latest movie ‘Capitalism’. A good roman Catholic, believing in all the goodness of the 19050′s…1950s…which was controlled by former Army guys who couldn’t find jobs after WWII. Good freemasons. Can’t some of you understand what is REALLY happening.? History is no longer taught in schools. Critical thinking is out. Sheeple followers are what we are supposed to be according to the rebbe(s).oloi.

  10. FriskyCat says:

    I cannot believe the greed of American owned companies… Isn’t it enough that they have taken our raises and cost if living increases we needed to pay our debts and support our families? Now to capitalize in the event of our deaths while employed by them! How terribly greedy of these companies.

    All I can say is may GOD have mercy on them on judgment day.
    They shall reap what they sow!

    Sage Reply:

    I thought I was pretty unshockable until I read about this. It’s unbelievable.

    AliSilver Reply:

    @FriskyCat, AMEN! I’d like to see them try to bribe their way through the pearly gates with their bag of ill gotten gain :)

  11. AZLFCFAN says:

    There is a website to go to and view if your employer has a policy out on you. It is listed at the end of Capatalism: A Love Story. Did anyone catch it? I’m very curious to know. I was just let go from Caterpillar and being a large company, am wondering if they’ve stooped this low.

    Sage Reply:

    I went to Moore’s website and I can’t find that information.

    This website has a list of employers who MAY have taken out insurance policies on employees:
    http://deadpeasantinsurance.com/which-employers-bought-policies-on-the-lives-of-employees/

    AZLFCFAN Reply:

    @Sage, WOW!! Thanks. That is an amazing list. I’ve got a completely different view on some of these companies now. I suggest people take a look at some of these.

    Sage Reply:

    You’re welcome. While these life insurance policies on employees may be legal they certainly are immoral.

  12. Christina says:

    This just goes to show you that “US PEOPLE” need to make a stand and vote because nothing is going to change unless WE change it. That is the fears of Government now that we are taking notice (us young people) and we as middle and lower class Americans means nothing to the ones with the means of power in the White House, they are all getting richer while stealing the money they can from the poor. YOU MUST WATCH CAPITALISM A LOVE STORY, or any of Micheal Moore’s movies on youtube, We can gripe all we want but to change it takes us getting off our butts and doing something about it, This womans story about Walmart is in the movie Capitalism and her children and husband. I highly suggest you see it and recommend it or any other of Micheal Moores movies available. Lets change and take our money abck they stole from us “The American People”

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