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:
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
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.