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SEPTEMBER 23, 2009 8:37PM

Dead Peasant Insurance; Corporate greed sinks to new depths

Rate: 16 Flag

 Does your company have an life insurance policy on you... that your family will never see a cent from? That will pay hundreds of thousands of tax-free dollars, exceeding the salary of the covered employee many times over,  usually on a low-paid worker. Even if the worker dies after they leave the insuring company.  A large number of corporations have been getting payoffs and tax shelters from life insurance on their rank and file employees, to the tune of 9 billion dollars a year.

 Apparently this is common and ongoing since insurance regulations were relaxed during the Reagan 80's, but I had not heard about this til today, from this video clip from Michael Moore's new movie, previewed on The Daily Beast:


Below is an excerpt from a MSN Money article, Does your boss want you dead? by Liz Weston.  (The article has no date on it but seems to have been posted in late 2003 - six years ago! This has been going on for decades!). Apparently the IRS wants their taxes on the payoffs and has been cracking down since 2005. They pulled Wal Mart into court and several states have banned the practice altogether. 

Labor leaders and some lawmakers have denounced the policies as unjust and repulsive. The companies say profits from the policies can help offset the increased cost of employee benefits and enhance the businesses bottom lines.

Corporate-owned life insurance actually comes in two flavors:

    Executive or key person policies that insure the lives of top executives. This coverage has been around for decades and has a clear business purpose, since losing the expertise, knowledge and contacts of top managers can be financially devastating for companies.

    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.

No one knows how many corporate-owned policies are issued on executives versus rank-and-file workers. Wal-Mart alone had taken out about 350,000 such policies between 1993 and 1996. Nestle USA had policies on 18,000 workers in 2002, The Wall Street Journal reported. Enron had $500 million in policies on workers. 

Sales of the policies came to a virtual standstill in September 2003, according to the insurer trade group ACLI, when the Senate Finance Committee approved legislation that would have taxed payouts made to companies if the employee had left more than a year earlier. That indicates that most policies arent being sold to protect companies financially against the loss of key current employees.

Strong insurance industry protests led the powerful committee to reconsider its action. Further work on the issue has been postponed until 2004, and indications are that the senators are softening on the idea of greatly restricting the policies, said Jack Dolan, ACLI spokesman. 

Did you know about this? The sheer cynicism of the names of the policies - dead peasant, dead janitor - just says it all. I don't know about you but this makes me nauseous.

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Just another reason to hate the corporations - jeez, can we dead peasants revolt now?
this makes me ill too Ardee...why do all the people on the Mall, and on the streets teabagging and carrying signs that have no logic or sense believe that the insurance companies are on their sides? It makes no sense to me. Are their brains that bound up in hatred and prejudice that they can't see who is squeezing their future quality of life out of them? I don't get it.
I can understand having insurance on your top guys, kinda sorta, but the rank and file? It's immoral. Let me guess, they likely don't provide decent health insurance to their employees either. Of course they don't, why should they?!! That would be counter intuitive since they stand to benefit from the untimely demise of their workers.

I really wonder if this country hasn't regressed to a repackaged time of sweat shops and Upton Sinclair's The Jungle. We treat our own citizens like shit and then we walts through countries trying to convert them to the fabulous American Way of living and doing business. Not so great at all.

I listened to a very interesting radio interview with Michael Moore last week, on CBC radio. I respect his work and as far as I am concerned he is a true patriot, one that our founding fathers would have approved of.
nauseous and walmart go hand in hand.

"The companies say profits from the policies can help offset the increased cost of employee benefits and enhance the businesses bottom lines"..... enhance? makes ya wonder if they wouldn't put arsenic in the drinking water at the store.
This is sick beyond belief!
As a (not yet dead) peasant, I've just got to say WHAT THE F%#K???
There is no cynical depth to which they won't sink as long as profit is put before people.
You know, I wish it was just Wal-Mart. I mean about the dead peasant insurance companies, it may be just them but lately it would not put it past any retail chains.

I have written before about the old Fred Meyer which everyone used to love here in Oregon, which is now owned by Philip-Morris Nabisco. Their overhead is skyrocketing with revamping perfectly good stores while they have instituted a policy where one mistake will get any employee fired. There is a boycott going on out here, but it won't touch PM-N.

Also, I just went to Whole Foods, you know that bonehead who thinks apples at 3.00 a pound negates the need for healthcare--and this guy has so much money, yet he's using a substandard carpentry contractor, K2MG, who according to the Pacific NW Regional Council of Carpenters, "does not meet area labor standards, including providing or fully paying for family healthcare and pension for all of its carpener craft employees." What a fucking phony. These money-grubbing assholes who tell us to suck it up and pay for it ourselves are bleeding US, the employees, dry. Off topic I guess, so sorry. You make a great point, and thanks for the post.
This makes me curious about something else. they have incredibly powerful asthma drugs these days. People with cystic fibrosis are living longer because of improved treatments. 26 is incredibly young for someone to die of asthma. Was this woman who died getting the correct preventative care? I seriously doubt it. A few years ago I would not have been so cynical, but now I am.
Barry, I'm with you. Are these people blind? Odds are that a lot of them are Wal Mart employees!

Ablonde, it it immoral, and now the circle is complete. WalMart refuses health insurance, works them to death and then collects on the policies. Michael Moore is one of the few truth tellers - no matter what you think of his style, god, we need him!

Yeah, Trig, they are one of the worst offenders, but really, it seems like a lot of major corporations did the same thing. As much as I despise WalMart, every big company in the US willingly poisons, steals and - now we see - profits off our deaths.

We're all peasants on that bus, nanatehay - we ARE fucked.

Emma, today socialism is looking better and better. Capitalism sucks.
Patrick, WTF indeed!

Latethink, these stories - so heartbreaking - are just grains of sand on a large beach in front of a mansion built on our illness and misfortune. And no, I'm sure that poor girl didn't get decent healthcare - she worked for fucking WalMart!
yeah, I knew about this, isn't it amazing that there's a whole class of people who produce nothing, who benefit no-one, who take home salaries for nothing more than devising ways to game the laws to scam more dollars out of the system, parasites all of them
"Labor leaders and some lawmakers have denounced the policies as unjust and repulsive."

Ya think!!!! It's shit like this that makes me want to scream. I mean really, just how low are these people willing to sink?
Unbelievable! I had no idea but am not surprised. Thx for making me more aware.
Susanne, yes, and I never thought any company could stoop so low to make a profit.

Roy - if you come back here, do you know any specifics?
But I remember back in the 80's when middle managers were criticized for exactly what you are describing - basically doing nothing but justifying their jobs and producing nothing. It seems that not much has changed.

Michael, it makes me want to start a national boycott on these companies. I wrote Rachel Maddow about this, though who knows if she or anyone would shine a light on this disgusting practice.

Charles and UK - isn't it amazing that this has been going on for over a decade and we never knew?
This would really be outrageous if it were true. But it isn't.

Almost all of these plans - certainly the ones getting all the press - were designed with the expectation that the employer would give back any net death proceeds to the insurance carrier through annually adjusted premiums. The plans only worked while the employees LIVED to support the tax breaks offered by the policies. The companies lost money on deaths because they lost a stream of future tax breaks. But I guess "Employers benefit from employees' continued health" wouldn't have sold as many movie seats and newspapers.

Nor did the industry call these "dead" anything policies. The press made that part up. "Janitor insurance," yes, but not "dead janitor" insurance. Meanwhile "dead peasant insurance" was never used by anyone in the industry, at least not until the media added it to the vernacular. The source of the term is a pair of memos that surfaced in the Winn-Dixie litigation. Both mention "dead peasants," but not "dead peasant policies," as the "dead peasant reference - an allusion to Gogol's novel "Dead Souls" that actually had nothing to do with the death of the insured employees.

But, hey, let's not let the truth get in the way of a good corporate bashing. Any stick is good enough to beat a dog, right?