ABC News: Are 'Dead Peasant' Life Insurance Policies Fair?
By Heather Monday Oct 05, 2009 4:00pm
From ABC News: Are 'Dead Peasant' Life Insurance Policies Fair?. The anchors were "stunned" to find that this is going on after watching Michael Moore's new movie, Capitalism a Love Story. Maybe Claire Shipman wouldn't be so surprised if they weren't using a documentary film maker as their research department.
Life insurance used to be rather straightforward, known for offering security to loved ones in a tough time.
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.
It's one of the strangest free-market perversions that Michael Moore highlights in his latest film, "Capitalism: A Love Story."
In the corporate practice dubbed "Dead Peasants" life insurance, companies wager on employees' lives, expecting to make money when they die.
And it's pervasive, said Mike Myers, an attorney who has uncovered many of these cases and helped angry relatives sue.
"Life insurance is traditionally used to guard against the death of breadwinners. This is an investment scheme," he said.
Dozens of blue chip companies have these policies, according to Myers. But only banks are forced to reveal them, and several have billions of dollars worth of policies.
"The driving force behind it is the tax deductions," he said.
The life insurance policies were designed to allow companies to insure a few crucial executives. Savvy companies then realized they could also get a tax break by insuring many lower-level employees.
The financial scheme doesn't actually cost the employees anything, except, some say, their trust.
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.
"We were just in disbelief they were able to do it, and actually cash the policy and cash in on the policy," Tillman said.
She sued, and won. Now, the government mandates that companies obtain the consent of employees.
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Dead peasants, it's a growth industry.
There is tremendous opportunity, get your dead peasants here…
Good one, Alice!
For a punk band
http://www.angelfire.com/me/girlsparadise/vam...
Is this the lawyer:
http://i.ytimg.com/vi/XcEBJvbJ_zg/0.jpg
Or
http://i178.photobucket.com/albums/w268/metal...
?
How are these companies getting life insurance without having the person jump through the hoops that the person would be forced to jump through if they were getting a life insurance policy of their own?
I need to visit doctors, get blood tests, drug tests, submit to various checks and such, and possibly 'black listed' but the company I work for doesn't have to do any of that?
safety in numbers. If they agree to do a lot of these they can sign up anyone.
Policy requirements vary from company to company, and even between policy types within the company. Whole life policies are more likely to require health tests, because they have an 'investment' value. They grow in value over the years, you can borrow against their value, and when they reach maturity, you can get a pay-out from the policy. Simple term policies, on the other hand, may not require such an extensive test, if any at all, but they may be good for only a specified period (such as a 5, 10, or 20 year policy), and there's no payout unless the person insured dies. Because of these limitations, companies can gamble and offer them without the extensive health screening required for whole life policies, and still make money, especially when they're looking at younger employees. After all, a 20-something employee statistically is going to outlive even a 20 year policy.
One of my first bookmarks on my first computer (in 2004) was this:
Dead Peasant Insurance also known as "Dead Janitors Insurance"
Walmart settled a class-action suit over this issue in 2006.
Wal-Mart Stores Inc.
Not really new, news--and I know ABC didn't just find out because when I worked for DisneyWorld(1999-2001), I signed a form stating that Disney could NOT be a beneficiary on any policy where I was the named insured. Who knows if they honored it, there could be a policy on me without my knowledge.
... denotes how morally bankrupt we are as a society.
This Nation is decaying from within.
"Maybe Claire Shipman wouldn't be so surprised if they weren't using a documentary film maker as their research department."
Is ABC using a documentary filmmaker as their research department? Or are they NOT using a documentary filmmaker as their research department...
What's the beef here? I normally don't give a rat's arse about grammar, but I'm truly missing the point.
I think they might be saying that if ABC were using sources OTHER than documentary filmmakers they wouldn't be so surprised. I think. You're right, the wording is pretty convoluted.
If the meaning of a sentence is unclear, it's a waste of words and brings only another question.
--so sayeth this old proofreader/copyeditor.
I get offers all the time from banks where I have accounts to sign up for small "free" life insurance policies. It makes me wonder if the bank could piggy back on that to a dead peasant policy with my unknowing consent?
employees, as sure as eggs are eggs, theres bound to be a larger company beneficiary policy attached.
Is this the next derivative scam? The mortgage crisis began when banks gave loans to people who could not afford them. Then, Wall Street used shady forms of investment to bet against to bet that those loans would go bad.
Now picture this. Shady brokers will prey on the elderly, who have life insurance policies, having trouble paying for their meds or care. They convince the elderly to sell their insurance policies for a lump sum which is probably 10% of the total worth of the policy. A life settlement company bundles many of these policies and sells them to banks or hedge funds as investments. Since they pay the premium every month, the sooner the elderly person dies the more money broker's settlement company receives.
Imagine the calls your grandmother will start receiving just to see if she has died yet.
People who have bets on early death will find themselves lobbying against effective health care!!!
for people whose deaths you will benefit from?
divided cannot stand?
Employees should start taking out life insurance policies on the CEOs of the companies they work for. If an employee is worth $100,000, what would a CEO be worth?
That should shake them up a bit.
It's a truism that insurance in excess of the buyer's actual potential losses is corrupting. That's been covered extensively on this blog in the context of credit default swaps and it's why property loss insurance policies have deductibles. Therefore, companies should be required to document the losses from the death of an employee either before they buy life insurance on that employee or before they're paid. Both have the same intention, but the latter is probably a more effective safeguard against cheating.
This deals with both ends of the problem. On the one hand, it's clear that no cashier or janitor is so vital to their employer that their death warrants a $340k insurance payout. On the other hand, imagine what will happen to Martha Stewart Living Omnimedia after Ms Stewart herself shuffles off this mortal coil.
Ghouls: To feed on corpses
Once you have a life insurance policy ...then you can reverse it.
Check out reverse life insurance. Or Life settlement investments.
Sell the policy to investors. Or better yet invest in a company that buys people out of their insurance. And then bundle all of the individual policies into an investment vehicle. I have heard that this is the next big derivatives market.
is that the same company that denies your health care can own your life insurance.
I was wondering "Where are the hitmen?"
This situation obviously begs for hitmen, right?
But you put your finger on it.
They already have their own hitmen - healthcare deniers.
millions of employees die from work related conditions.
Hitmen only cost 5 to 10 grand.
What are the life insurance policies paying again?
:>)
BINGO!
The phrase "Dead Peasants" reminds me of Dead Souls, though the main character in Gogol's novel was far more humanitarian, since he only invested in the "credit" afforded by peasants who were already dead, rather than planning to profit on future fatalities.
Stay classy, unbridled capitalism!
What if you worked in hazardous occupation, for instance undersea salvage diver? Will the boss take more risk with your life? Yeah, go ahead and dive in -- the hoses look safe to me.
The potential for something almost akin to murder seems likely to have happened by now if this really is widespread. Do you spend the same amount of money maintaining safety equipment if your employee's death creates profit?
It is really insane that this situation is allowed to exist without the knowledge of the employee or his family.
Sickness, death, war, addiction, poverty, you can make money on anything. Isn't capitalism great?
So a non family member or non spouse has the policy unknown to the person the policy is for? Let's say your company can outsource your job. If they can make your death look like an accident and not get caught they can also cash in on the policy. Of course I am being paranoid. Anyone out there know the success rate for solving murders in this country?
If you're killed by someone you know, it's over 90%. Stranger killings, though, much much lower. Probably 50-60%. Professional hits, well, if depends on whether you're talking real pros, or idiots on parade that hire some doofus to kill their spouse. The former, incredibly low, the latter, pretty high. But for all murders, overall solve rate was something around 75% or so last time I saw a number.
So how much does ABC profit by, when Claire unfortunately kicks the bucket !?
List of suspected corporations doing the 'dead peasant' insurance.
The ownership list of the US MSM.
WSJ link
these companies are beyond shameless that do this. I'm glad Ms. Tillman won against that company who USED to employ her poor deceased brother when they collected on a life insurance policy after his passing. anything to make a profit. no morals or ethics clearly reign in that company.
they stop allowing people to take out insurance on other people without their permission is that the other people where dying at a higher rate than chance would allow. What would stop a company from buying life insurance on its employees then increase the employees chance of dying by stressing them out and then fire them without reason. This would cause some of them to die earlier than normal. The company can then blacklist them to make sure they can't get hired. This would kill some more. A few companies might just decide to arrange accidents for thier employees. Very dangerous idea especially if there is a large bonus for the genius that came up with the idea.
Life insurance is designed statistically to profit the insurance company. The companies buying the insurance for their "peasants" are making a profit by taxpayer subsidies.
Take away the taxpayer subsidies (entitlements).
http://en.wikipedia.org/wiki/Insurable_interest
Many companies require a pre-employment physical and have access to your health records through company health insurance, etc.
So these are not just roll of the dice bets on which employees might die. The companies have inside information that they can use to maximize returns on life insurance policies.
This practice should be outlawed immediately.
Most companies (certainly everywhere I've worked) has at least one employee whose death would be either catastrophic or very expensive for the company. For instance, two jobs back I worked at a place where there was one very old guy who knew the systems of the place better than anyone. If you didn't know how something worked, you went and asked him and received enlightenment. He was very old and had already had one heart attack. His death regularly topped the list of program risks. We were working to mitigate the inevitable, but he was so broadly experienced and so smart and the operation was so small that this was hard. The mean estimate of the setback resulting from his passing was somewhere around nine months. That, to me, meets the definition of an insurable interest.
Simply requiring the company buying the insurance to prove their insurable interest in the employee at the time of their death and you solve the problem.
I agree with you about requiring the company buying the insurance to prove their insurable interest in the employee. However, this absolutely must be based on the person's salary. Puts meaning to getting what you pay for.
There can be many people working for a company that have a lot of knowledge and expertise, but still make peanuts as compared to executive pay. Ideally, your company should have never put itself in this situation of one man having all the knowledge such as the example you gave. It's called properly documenting process and procedure as a matter of retention protection.
It would be interesting to see if companies that have aggressively adopted this practice have proven to be more likely to cut back or eliminate health insurance (as a way to accelerate those payoffs).
Bring out your dead...
I'm not dead yet...
Close enough!
h/t Monty Python
...if the companies are getting awarded millions of dollars, doesn't this raise the price for everyone else? Sorta like how the cost of actually paying for health care evidently raises the cost of premiums across the board?
Or does the fact that so many premiums are being paid keep the costs lower?
And I wonder how much tax is being evaded by this practice?
...of the employee." What happens to the employee, or prospective employee, if he/she denies consent for the company to insure them, with the company as named beneficiary? Do they get fired, or not hired?
Such bullshit. Who is verifying to make sure proper consent was given. I am sure there are many people who have said No, but the company goes ahead and does it any way. It would seem if consent was required from employees, companies should also be required to disclose the insurance policies they have taken out on their employees.
Unless the employee is an executive making at least $100,000 or more, this practice should be illegal. If an insurance company is found to allow such policies to be taken out, the insurance company should lose its license period.
Want to pay for health care reform, STOP this practice!
According to the Wall Street Journal, and based on President Bush’s FY 2004 budget, corporate-owned life insurance as a whole, including the money accrued from the purchase of janitors insurance--called “inside buildup”--will cost taxpayers $1.9 billion a year, and $9.3 billion over the next five years, in lost revenue.
When employers purchase janitors insurance, the premiums they pay for these policies grow tax-free, and the company receives the tax exemption on life insurance investment gains, or “inside buildup.” Any annual gains flow directly to the company's income statement, similar to pension income. Then, once the insured dies, the company receives the tax-free death benefit, and the family receives nothing."
The following companies, however, are believed to have been named as the beneficiary of life insurance policies on employees:
* ADAC Laboratories
* Advanced Telecommunication Corp.
* Aeroquip Vickers Inc.
* Alabama Power Co.
* Alfa Corp.
* Allegheny Technologies Inc.
* Allergan Inc.
* Allfirst Financial Inc.
* Amegy Bank, N.A.
* American Business Products, Inc.
* American Electric Power
* American Express Co.
* American Greetings Corp.
* American Management Systems Inc.
* American Seafoods Group LLC
* Ameritech Corp.
* Amerus Group Co.
* Anadarko Petroleum Corporation
* Appalachian Power Co.
* Arch Chemical
* Aristech Chemical Corp.
* AT&T Communications
* Atlantic Richfield Co.
* Avery Dennison Corp
* Avon Products Inc.
* B. F. Goodrich Company
* Ball Corporation
* Bank Boston
* Bank Of America
* Bank One Corp.
* Barnett Banks Inc.
* Bassett Furniture Industries Inc.
* Be Aerospace Inc.
* Bear Stearns Companies
* Bellsouth Corporation
* Boise Cascade Corp.
* Boston Company
* Boston Federal
* Bristol-Myers Squibb Company
* Camelot Music, Inc.
* Carolina Power & Light Co.
* Carpenter Technology Corp.
* Catskill Financial Corp.
* Central Power & Light Co.
* Ch2m Hill Companies Ltd.
* Charming Shoppes, Inc.
* Checkfree Corp.
* Chemical Banking Corporation
* Citibank, N.A.
* Citizens Bank
* Clark Inc.
* Clorox Company
* CNF Inc.
* Coca-Cola Company
* Columbus Southern Power Co.
* Commercial Intertech Corp.
* Compass Bank (Florida & Alabama)
* Computer Technology Associates Inc.
* Consolidated Natural Gas Co.
* Consolidated Rail Corporation
* Cox Enterprises, Inc.
* CTA Inc.
* Cymer Inc.
* Diamond Shamrock Inc.
* Diebold Inc.
* Dime Bancorp Inc.
* Dow Chemical
* Earle M. Jorgensen Co.
* Eastman Kodak Company
* Eaton Corp.
* ECC Capital Corp.
* Enserch Corp.
* F&M Bancorp
* FiberMark Inc.
* Figgie International Inc.
* Fina Oil & Chemical Company
* First Bank System Inc.
* First Commonwealth
* First Midwest Bancorp Inc.
* Fleet Bank
* FleetBoston Financial Corp.
* Flightsafety International Inc.
* Frontier Bank
* Fulton Financial Corp.
* GATX Corporation
* Georgia Power Co.
* GNC Corp.
* Great Plains Energy Inc.
* GTE Corporation
* Gulf Power Co.
* HCR Manor Care Inc
* Hechinger Company
* Heritage Commerce Corp.
* Herman Miller Inc.
* Hershey Foods Corporation
* Hillenbrand Industries, Inc.
* Hosiery Corporation of America
* Houghton Mifflin
* Household Finance
* Hovnanian Enterprises Inc.
* Hughes Supply Inc
* ICI Americas, Inc.
* Idaho Power Company
* IKON Office Solutions Inc.
* Indiana Michigan Power Co.
* Integra Bank Corp.
* Intermark Inc.
* Iowa First Bancshares Corp.
* Iroquois Bancorp Inc.
* J Jill Group Inc.
* JP Morgan Chase & Co.
* Kansas City Power & Light
* Kansas Gas & Electric Co.
* Keithley Instruments Inc.
* Kentucky Power Co.
* Keycorp Ohio
* Kimberly Clark
* Korn Ferry International
* Laser Master Int’l. Inc.
* Linens N Things Inc.
* LKQ Corp.
* Louisiana Pacific Corp.
* Manor Care Inc.
* Marriott International Inc.
* McDonnell Douglas Corp.
* Media General Inc.
* Medicalcontrol Inc.
* Menasha Corporation
* MidAmerican Energy Co.
* Miix Group Inc.
* Mississippi Power Co.
* MNC Financial Inc.
* Mueller Industries Inc.
* National City Corporation
* NationsBank
* Nestle Enterprises
* Norfolk Southern Corp.
* Norfolk Southern Railway Co.
* Northern States Power Co.
* Ohio Power Co.
* Old National
* Olin Corporation
* Owens & Minor Inc.
* PacifiCorp
* Panera Bread Co.
* Panhandle Eastern Pipe Line Company
* Parker Hannifin Corp.
* Penn Treaty American Corp.
* Penns Woods Bancorp Inc.
* Phibro Animal Health Corp.
* Philipp Brothers Chemicals Inc.
* Phoenix Companies Inc.
* Pinnacle Financial Services Inc.
* Portland General Electric
* Potlatch Corporation
* PPG Industries
* Procter & Gamble Company
* PSS World Medical Inc.
* Public Service Co. of New Mexico
* Public Service Co. of Oklahoma
* Public Service Enterprise Group
* Questech Inc.
* R. R. Donnelley & Sons Company
* Ruddick Corp.
* Ryder System Inc.
* Sallie Mae (Stud Ln Mktg Assoc.)
* Savannah Electric & Power Co.
* Sequa Corp.
* Service Merchandise Co., Inc.
* Shearson Mortgage
* Sherwin-Williams
* Sky Chefs
* Smart & Final Inc.
* Smith Barney
* Sonoco Products Co.
* Southwest Bank
* Southwest Water Co.
* Southwestern Bell Corp.
* Southwestern Electric Power Co.
* Southwestern Public Service Co.
* Star Banc Corp.
* Stauffer Management Company
* Steelcase Inc.
* Sturgis Bancorp Inc.
* Summit Bank of N.J.
* Swank, Inc.
* Tellabs Inc.
* Tenet Healthcare Corp.
* Texas Eastern Transmission Corp.
* Tompkins Trustco Inc.
* TXU Corp.
* TYCO International
* UniFirst Corp.
* Union Bank
* United National Bancorp
* Urocor Inc.
* Vineyard National Bancorp
* W. R. Grace & Company
* Wachovia Corporation
* Walgreen Company
* Wal-Mart Stores
* Walt Disney
* Wang’s International, Inc.
* Wells Fargo, N.A.
* West Coast Bancorp
* West Texas Utilities Co.
* Westar Energy Inc.
* Western Aire Chef Inc
* Western Resources, Inc.
* Westpoint Pepperell
* Winn Dixie
* Winnebago Industries Inc.
* Woolworth Corporation
* Xcel Energy Inc.
* York Water Co.
* Zale Corp.
I worked for a company that made no bones about the practice. They called the policy on me "key man" insurance. the twist to the whole thing was they were co-beneficiaries with my wife, in the event of my untimely death.
Many states do not allow this in their state. My former Employer has a life insurance policy on me and my dependants will receive the money. I get a W2 from them every year and have to pay the income tax on a certain amount of the insurance over a Government set schedule.
Pay close attention to your W2 and you may discover you are paying taxes on a policy that will not benefit your family after your death.
what a crock of shit and look we are forced to live while the 1% gets richer. Poor and poorer.
stand up for your rights
we need to join arms and march
it's good for them they keep us busy fighting each other and a war about bullshit so they can keep us under control.
don't know when people will open their eyes.
Even the name of the policy is offensive. This must be stopped; it's absolutely disgusting that these companies have been allowed to do this, especially in today's economy when so many people are hurting and they just keeping heaping on the insults. If we continue to let these executives and CEOs continue this practice then we as a society will continue to get exactly what we deserve.
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