Dead peasants insurance....

While I think it is a bit morbid for an Employeer to have life insurance of some of its workers I can see how it would make since. For skilled employees that the company has a good deal of money tied up in training and such where a death could cause a problem (Sort of the same thing with Employeers that force workers to sign noncompeat clauses which IMHO is about 100X worse than the incurance policy deal)

As far as walmart goes I can't shake the feeling that they are taking the policys out on there 80 year old door greeters LOL

Betina Tillman felt shocked and deceived when a reporter from The Wall Street Journal told her that her brother, a music store cashier, was insured by his employer for $339,000 when he died, despite the fact that he no longer worked at the store.

So when Irma Johnson learned that her husband, Daniel, who died of brain cancer, had been insured for $1.5 million, it should have been at least a small comfort.
But she did not receive the money. His employer did. - her husband worked for a bank I believe, but it was a lower job, not close to being high up on the chain...but along with that 1.5, they discovered there was another policy taken out on him and altogether they raked in close to 5 million.


Jane St. John had two children and was pregnant with a third when her husband, a butcher at a Winn-Dixie store, was killed in an auto accident. When the Killeen, Texas, woman called the company to ask about insurance, she said she was told about a $17,500 policy to which she was entitled. St. John said Winn-Dixie told her nothing about the $102,000 the company collected from a corporate-owned policy on his life. She found out about it this summer, eight years after his death, from a lawyer who researched court records. The idea that the company would secretly insure lives, and then not share the benefits with the families, "is sick," she said. "That is creepy."


Mike Rice was a 48-year-old assistant manager when he died of a massive heart attack at the Wal-Mart store in Tilton, N.H. His widow, Vicki, became the lead plaintiff in a class-action lawsuit against the company after she discovered Wal-Mart collected $300,000 from a life insurance policy it owned on him. Vicki Rice believes job-related stress contributed to the heart attack and says it is totally immoral for Wal-Mart to profit from his death.


National Convenience Stores got $250,000 when one of their employees was killed in a robbery. Wal-Mart got $64,000 when an employee died of a heart attack. The families of these employees got nothing.

_____________________________________
Another name on CM Holdings' 1990 death run is Margaret Reynolds, of Uniontown, Ohio. Mrs. Reynolds suffered from amyotrophic lateral sclerosis, or Lou Gehrig's disease. In her final years, her five grown children took turns caring for her. At one point, says her son John, they begged CM Holdings for $5,000 to pay for a specialized wheelchair so they could take their mother to church. "They said it wasn't covered," Mr. Reynolds says.

Mrs. Reynolds, a $21,000-a-year administrative assistant and buyer, died in 1998 at age 62. Her family received a $21,000 benefit from a life-insurance policy provided to employees by CM Holdings. CM Holdings received a COLI payout of $180,000.

Felipe Tillman William Smith Doug Sims Peggy Stillwagoner
Employment Music-store worker Convenience-store clerk Distribution-center worker Home-health nurse
Died Jan. 1992 Dec. 1991 Dec. 1998 Oct. 1994
Age 29 20 47 51
Cause AIDS Murdered at work Heart attack Car accident
Death Benefit $339,302 $250,000 $64,504 $200,000
Paid to Camelot Music/CM Holdings National Convenience Stores Wal-Mart Stores Advantage Medical Services

Source: WSJ research

http://online.wsj.com/public/resourc...s/april_19.htm
________________________________

While there are some companies that have it on their big-time employees, I think it said Enron had $500 million worth, but what I don't like is these average employees like as a cashier. The 81k I got from the movie, a 26 year old with 2 kids, worked as a cake decorator for 7-8 months I believe and they had the 81k on her and she didn't work there anymore I believe. That's actually a lower one from what I've seen, they usually are well over 100k, Winn-Dixie was in a big one...they had told their workers they couldn't give them their retirement benefits, but still had thousands of these policies they were paying out on former workers.

Quote:

---

Originally Posted by Counts

While I think it is a bit morbid for an Employeer to have life insurance of some of its workers I can see how it would make since. For skilled employees that the company has a good deal of money tied up in training and such where a death could cause a problem (Sort of the same thing with Employeers that force workers to sign noncompeat clauses which IMHO is about 100X worse than the incurance policy deal)

As far as walmart goes I can't shake the feeling that they are taking the policys out on there 80 year old door greeters LOL

---

I agree that might be the case with some of the policies that the companies take out, but your regular workers? And even when they no longer work for the company? They are called "Dead Peasants" or "Dead Janitors" policies between themselves, not names we gave them.

Actually they like to take them out on younger people, they bring in 200k-400k I believe and an older employee averages 120k-200k, simply because the younger person isn't supposed to die...women are supposed to live longer also, so they bring in more then men.

Yeah, I guess that 300 grand MIGHT pay for the training of a MUSIC STORE CLERK..... People can try all they want to justify this practice, but it's unjustifiable..and IMO constitutes fraud and should be eliminated.

How is it fraud?

Quote:

---

Originally Posted by sup-rbeast

IMO constitutes fraud

---

How so?

Personaly I am all for a ban on something like that due to the fact that it at the very least gives the impression that the company hopes to work you to death LOL


That being said I really can not see how it hurts anyone

Quote:

---

Originally Posted by 1inStripes

How is it fraud?

---

Because really, an employer has no interest in anything more than an employees health. Once they are gone, you aren't going to see the employer pay for the funeral or anything else...so they shouldn't have a right to buy life insurance on them. It's a slimy practice..and the money isn't used in any way, shape, or form to the benefit of the deceased...so IMO, it's a fraudulent claim on the part of the employer. If they want to buy insurance on an employee, the employer should be buying better health insurance for them.

Quote:

---

Originally Posted by sup-rbeast

Because really, an employer has no interest in anything more than an employees health. Once they are gone, you aren't going to see the employer pay for the funeral or anything else...so they shouldn't have a right to buy life insurance on them. It's a slimy practice..and the money isn't used in any way, shape, or form to the benefit of the deceased...so IMO, it's a fraudulent claim on the part of the employer. If they want to buy insurance on an employee, the employer should be buying better health insurance for them.

---

Who says the company isn't providing great health insurance for them? You can question whether it is ethical or not, but it is not fraudulent.

Quote:

---

Originally Posted by sup-rbeast

Because really, an employer has no interest in anything more than an employees health. Once they are gone, you aren't going to see the employer pay for the funeral or anything else...so they shouldn't have a right to buy life insurance on them. It's a slimy practice..and the money isn't used in any way, shape, or form to the benefit of the deceased...so IMO, it's a fraudulent claim on the part of the employer. If they want to buy insurance on an employee, the employer should be buying better health insurance for them.

---

The point is that if i were to be hit by a bus this evening my Company will have to hire and then train someone to take my job plus the cost of a contractor till my spot was filled considering that training from scratch alone would cost apx. $10,000 my Co has a sizable investment in me and a life insurence policy could counter some of that cost......That being said it would creep me out if they were to do that LOL


to your 2nd point you may be on to something with requiring an employer to provide health benifite to you before allowing them to take out life insurance on you (Heck the insurance Co.s could probably come up with some kind of package dealLOL)

And straying into left field....I wonder if an employee of a small Co. (that might go under if the owner were to kick the bucket) should be able to take out life insurence on the owner given that the owners death could couse much bigger money problems employee than the employees death to the employer.....something to think about

Quote:

---

Originally Posted by 1inStripes

Who says the company isn't providing great health insurance for them? You can question whether it is ethical or not, but it is not fraudulent.

---

That's what is being challenged and where this has been found fraudulent. These companies have been taking out loans for money for these policies, but claiming that they were for the benefits for the employees, which of course they don't. And IT IS against the law to use life insurance as a tax shelter if there isn't a legit interest, which is exactly what they are doing.


The courts have tended not to accept companies' rationale for using COLI. "We do not believe that the purpose of the [plan] was to fund employee benefits," wrote Judge Robert P. Ruwe in a 1999 federal Tax Court ruling against Winn-Dixie. The Jacksonville, Fla., supermarket chain brought the case against the IRS, seeking to reinstate deductions it took on COLI policy loans covering 56,000 workers.

Judge Ruwe noted that Winn-Dixie had high staff turnover and didn't end up providing retiree medical benefits to most of its workers, while it continued to collect death benefits on those who leave the company before retirement. The judge concluded that the executives "recognized that it was a tax shelter," and that ultimately, over the 60-year life of the policies, the company hoped to save $2 billion in taxes.

WSJ.com - Companies Profit on Workers' Deaths Through 'Dead Peasants' Insurance


There is major problems with this. Companies benefit from these policies tax-free buildup of value and then can collect the benefits if they die tax-free. And they don't have to give out a lot of info either.

While the IRS can find out about COLI policies directly from the companies, disclosure requirements aren't tight, making it hard for others to determine just how much money is squirreled away in the insurance. Employers do, in fact, use other kinds of COLI to pay for lavish retirement benefits for executives. But disclosure rules don't require them to distinguish between executive COLI and janitors COLI.


There are states where the employer doesn't have to inform the person and most employees don't, there's another problem. And even when they are required and do inform the employee, there's a lot left out. Usually when they make them sign a consent, they'll over a free small 5k-10k insurance policy for the employee if they agree, but don't let them know that they would benefit more(a lot more) than they would - or that the employer can cancel that little 5k-10k at any time because it's not protected under law. There is too little known about this, too little info being requited and too few laws for this...that's why it's "legal".

Sounds like smart business to me, and if the worker had worked for a company at any point in time, they have a vested interest in that person. Life insurance policies are not something you pay and then decide to cancel without you being a completel moron. If you want to complain, complain about the insurance companies who accept and setup this type of plan.