Dead peasant policies revisited

J

justiceusa

Registered Senior Member
The original article on Corporate owned life insurance appeared last spring in the wall street journal. They refered to the policies as "janitor policies". The Houston chronicle got down to the nitty gritty terminology. (dead janitor dead peasant)
Currently the IRS has won three cases in federal court disallowing the tax deductions involved with these policies. Federal judge nancy Atlas has claimed the policies to be sham policies. Wallmart did not stop buying the policies until 2000.
However the polices are only illegal in texas and several other states. Texas will not allow the wagering on the deaths of employees. There is also no incentive to provide a safe workplace. As an example Winn Dixie, a convenience store chain, took out $250,000 policies on the lives of their clerks. In contrast, Diamond Shamrock a similiar size company put two clerks in their stores on the night shift, and in high crime areas put up bullet proof glass to protect the clerks. Over a five year period Winn Dixie collected on 9 policies. Diamond Shamrock had only one clerk killed on the job.
The original purpose of the policies was to provide funds for retirement health benifits. But most of the corporations involved simply put the earning from the policies into their general fund. Most corporations have also made elaborate attempts to hide the existance of the policies from their empolyees.
The above info comes from The Houston chronicle, The Austin Chronicle, The IRS , The Department of Justice and various other web sites
 
Dead peasant clarification

Actually little has actually been published or discussed about these Corporate owned life insurance policies because most people are not aware of their existance. Most of what has been said is in reference to the state of Texas. Primarily because the policies are illegal in Texas and that is where the corporations involved got caught with their hand in the cookie jar. However this is a nationwide practice, over 25% of the fortune 500 companies hold this type of policy on their rank and file workers. This is not merely a type of insurance held on key executives.
Walmart is mentioned specifically because it has the most policies, over 350,000 nationwide, with poilicy amounts up to $750,000. But hundreds of corporations are involed in this practice, including companies like ATT,and Proctor and Gamble.
The list goes on and on. The fact is that hundreds of people on this forum most likley have a life insurance policy on themselves that they are not even aware of. This is a national disgrace and if no one cares then so be it.
But be aware that the banking, mortgage and credit card industries are looking closely at this type of policy. OK so now you are thinking that if the bank takes out a policy on you at least your debts will be paid. Wrong! It only means that the bank will profit from your death and your estate will still be resposisble for paying the debt.
And as I type this statement the life insurance lobbiests are trying to push through a nationwide insurance format that is similiar to that of the state of Georgia. What about georgia??
In Georgia a company may take out a life insurance policy on you, on your spouse, and on your children. And when that drunk runs the red light and wipes out your entire family guess who gets the money? Do we want that nationwide? Are we just going to sit here in our complacency and let it happen??
http://www.bigclassaction.com/class_action/complaint_form_walmart.html
 
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Dead peasant update

Among the list of companies who may possibly have a life insurance policy on "your" life without you being aware of it are: W.R Grace, Hershey Foods, Dow Chemical, Bassett Furniture, American Express, National Convenience Stores, and Bank of America.
There are several hundred companies involved in this practice.
 
House bill 4551

I urge anyone who reads this to send an e-mail to their congressman requesting that they support house bill 4551.
Presented by Texas congressman Gene Green this bill would require corporations to notify employees that there is a life insurance policy on that employee, and that the proceeds of that policy will go to the corporation.
I feel this bill is not really strong enough, but it is a beginning.:)
 
Originally posted by justiceusa
I have come to the the conclusion that few people who subscribe to this forum trully understand the
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That's a bold conclusion based on limited facts, isn't it?

:m: Peace.
 
Originally posted by justiceusa
"dead peasant policies" ... are goulish violations of workers lives.
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While I think you’ve made a good case for these policies being in bad taste, I don’t see much unethical about them otherwise. Regarding the convenience stores, the insurance companies charge more for policies where the odds of death are higher. Lawyers jump on companies that even give the appearance of intentionally making death more possible. Given that it seems it would be tough for a company to profit from these policies with the exception of the tax benefits. Therefore I see it as a tax shelter only. The workers seem unaffected.

Besides, these policies are already on the way out. As your last link notes, “The implication for the estimated 900 large corporations that bought COLI policies was that [the tax benefits] looked too good to be true. And, as a 1996 piece of federal legislation and a recent spate of court decisions and lawsuits are showing, that was exactly the case.”
 
Goofyfish

There is plenty of evidence, but far to much to be expressed here. I just tried to summarize everything I had found. Just go to any search engine and enter the term "dead peasant" I in fact found this forum while doing research on this subject. "hotbot is a great search engine with its new format.
By the way in the previous thread on this this subject you stated that you did not know of any Wallmart, stores outside of this country. There are 520 in Mexico, plus stores in Canada.;)
 
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Zanket

This is about far more than ethics or bad taste. The Corporations are still buying these policies because life insurance proceeds, are non taxablable.
Can we build a strong economy based on this type of financial situation, ie "dead workers"? The companies are posting the face value of the policys on their balance sheet as an asset, which makes them look good on paper to the financial analysts. That is a bit too Enronish for me. The true asset will not be realized until some unknown point in the future when all of the emloyees are dead. By the way Enron held two billion dollars worth of COLI policies when they collapsed. However the Enron execs had borrowed all but 125 million from the policies and divided the proceeds among themselves. Do a little research.:)
 
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I don’t have a problem with them betting on the lifespan of their workers for tax purposes. Companies have an obligation to their shareholders to do any legal thing to maximize their profit. If the majority dislikes these policies they can ban them, and it looks like they will. If workers are not at greater risk due to the policies then only bad taste remains to complain about. If the Enron execs skimmed the policy benefits then that is a separate issue, as is how the policies are accounted for on the balance sheet.
 
Zanket

You sound like an Enron ecex. Anthing goes huh? So when that massive biological terrorist attack wipes out enough people to bankrupt the insurance companies, and takes down the corporations with them, we just write it off. again do some research to back up your opinions;)
 
I am not like an Enron exec because I believe profit should be made legally. What does a massive biological terrorist attack have to do with our discussion? Please elaborate. I am backing up my opinions. You haven’t shown otherwise.
 
Zanket

Many deaths would mean many policies to pay off. The insurance companies could not do it. this is an exteme example ,but when we forget history it tends to repeat itself. Smallpox killed nearly half of the population of Europe in the 16th century. It is still around, and there is no cure. There are a billion angry Islamic's who would love to send it to us. We are in a peculiar time in history when we can take nothing for granted. Our economy must be built on a stronger foundation than a bottom line that only looks good.
 
Thanks for elaborating. That’s a separate issue that goes to insurance company viability. They must follow regulations to ensure they can pay off events that are within the realm of reasonable possibility. It is only recently that scenarios involving such extreme death or destruction were put into that realm. Consequently, insurance premiums have sharply risen. This puts our economy back onto a solid foundation.

Regarding smallpox, the CDC (Centers for Disease Control) has a plan for inoculation and isolation in the event of an outbreak. Life insurance companies take that into account.
 
I hope the CDC has more luck with smallpox than it did with aids. At one time the CDC predicted that aids would be limited to fewer than 50,000 people and then fade away. Smallpox is still an unknown entity. There are strains that the vaccine will not prevent.
We currently have many strains of bacteria that are becoming resitant to antibiotics. The point is, we have too much of corporated assets tied up in a venture that could collapse . COLI are not based on sound economic investment in reguards to the current world situation. Why aren't the businesses investing in themselves? That is a deductible investment.
 
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How are COLI any less sound than life insurance policies as a whole? That’s all they are, after all. Likely they are a sound economic investment as the insurance industry has not yet imploded and still posts profits. Despite the AIDS epidemic too.

The CDC cannot predict the future perfectly of course but it does pretty good. The resistant bacteria issue is debatable. Articles I’ve read say that new antibiotics to kill the resistant bacteria are easily done technically but won’t be done until they are a better investment. Not enough people are dying from resistant bacteria to make the investment in new antibiotics profitable.

As to smallpox strains that the vaccine will not prevent, I’m sure the CDC is tasked to fix that. There will always be risks that are not yet managed. Life must go on regardless.

What do you mean by businesses investing in themselves? I thought they all did that.
 
Originally posted by justiceusa
What number do you think would be enough??
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The number that rewards investors behind the new antibiotics beyond what they could expect to make on alternative investments. If they did otherwise then more people would die overall. (Investment A saves 100 lives. Investment B saves 10 lives. Choose one.) Our society values both human life and the profit to be made by extending it. That is why we have a significantly longer lifespan than non-capitalistic societies.

You are right that it takes many years to develop a new vaccine. No doubt the manufacturers have considered that. If they thought millions of people would otherwise likely die from variant smallpox strains five years from now, they’d be hell-bent on making the new vaccines as you read this. Imagine the profits!

I read the link. It makes an ethical argument only. No wrongdoing on the part of the companies is demonstrated. Ethics will always be debatable. If the majority cares to end the debate they can make a law barring the practice. I think when the public wants companies to be ethical (the public’s words) but does little to stop it (the public’s actions), then actions speak louder than words.
 
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But you didn't answer how many have to die you only gave a business school example which appears to put lust for money high above ethics, morality and common human decency.

The link was primarily to inform others who might read it. As far as ethics being debatable one must first have them and "corporate America has not in recent years displayed that they do." from rutgers law school web site.

The problem with your public action theory is that until recentlly the public was totally unaware of the existance of the policies. But in your perfect world, and even though the policies had been hidden from them, I am sure that you will still blame the working class for not taking action against the largest corporations in America.

Do some research and see how many companies are being or have recently been investigated by the securities and Exchange commission. Companies are only now rushing to report the existance of "peasant" policies" to the commission. Perhaps because they are at last being forced to be honest. Were Worldcom and Global crossing your idea of honesty? It appears that even honesty is debateable as it seems to change with the financial times.

"By being deceptive and just plain dishonest corporate America has dug itself into a hole. The best thing to do now is to quit digging." This statement was made by a Wallmart executive when he was asked to respond to the Houston Chronicle article regarding "peasant policies" Ironically the statement does not seem to address the policies. perhaps the statement was taken out of context, however I strongly agree with it.

What else can I say but that we shall continue to agree to disagree.
The following reply denies justice to all American workers.
 
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