Is Your Life Insured?

“Fight Against Stupidity And Bureaucracy”

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It’s an interesting question.

But worry not, I am not going to try to sell you an insurance policy nor even recommend one.

Quite the reverse in fact.

Many people have some kind of life insurance for the financial protection of their families if they should be unfortunate to pass away unexpectedly.

It is usually for enough money to pay off the mortgage with a little left over to provide some kind of income for the wife and kids.

At least that’s how it should be.

dead peasants indursnce

But there is a growing trend for employers to insure their employees. A nice gesture you might think at first. Until you find out that the beneficiary of the insurance would not be the survivors or estate of the insured employee, but the corporate pension plan!

It is unofficially known as “dead peasant” insurance, and hundreds of corporations have already taken out policies worth hundreds of billions of dollars, on thousands of employees, providing companies with a steady stream of income as current and former employees die  –  even decades after they have retired or left the company.

And new “dead peasant”policies worth at least $1 billion are being put in place every year!

Unsurprisingly the greedy money-grabbing banksters are especially fond of the practice. Bank of America’s policies have a cash surrender value of at least $17.6 billion; Wells Fargo’s at least $12.7 billion; and JPMorgan Chase at least $5 billion, according to filings with the Federal Financial Institutions Examination Council.

corporate greed

Of course the tax-men are to blame too – aren’t they always? – because so-called company-owned life insurance offers employers generous tax breaks. For example, company-paid premiums are tax-free, as are any investment returns on the policies and the death benefits eventually received. Although having said that it has to be admitted (grudgingly) that the I.R.S. has taken companies including Winn-Dixie and Camelot Music to court for using such policies as tax avoidance schemes.

Many people faced with a request from an employer to consent to such a policy are too afraid not to comply in case it affects their job or promotion prospects. They shouldn’t be because that would probably be illegal as well as unethical. Class-action lawsuits against several companies with such policies are already underway or have been settled. Several companies, including Walmart, settled the suits, paying millions to low-ranking employees who had been covered.

So if you are uncomfortable with the thought that your company might profit from your death, don’t sign up.

And as for the corporations? I’m as fond of making a few bucks as the next man, but you have to draw a line somewhere and I think corporations should be content with the contribution their employees make to their company profits when they are alive, instead of conniving to profit from their deaths also.

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4 thoughts on “Is Your Life Insured?

  1. An argument can be made for an employee to insure his employer. Especially if it is a small business. The only thing that has to exist is an “insurable interest.” The employee would stand to loose income with the death of his employer.

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