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Sat 23 Apr, 2005 05:19 pm
I've heard that in many states it's legal for a company to take out a life insurance policy on you without you or your families knowledge. And when you die the company can collect.
This isn't limited to CEO's and other valuable employees whom if the company lost the company would experience a hardship. I've heard of a case where a convenience store owner was setting up life insurance policies on his cashiers and expecting to receive a $150,000.00 check if the employee was killed. This employer cashed in when the man died even long after the employee was no longer working for him. Apparently his family found out about the policy and won a court battle to receive the funds. But think about all of the policies where the families didn't find out.
Doesn't it disturb you to know that the company that you work for, or one that you may have worked for in the past may be able to take out a life insurance policy on you without your knowledge, and cash in upon your death?
If anyone has more knowledge about this practice I'm interested in reading more about it.
Interesting.
Insurance on individuals is only to be sold to someone who would not benefit from that other person's death. So insurance on any employee, cashier or company president, that the business needs is allowed (required in some cases). If it is the type of policy where the entire premium is paid in full, up front (tho that is unusual), the holder of the policy would technically still be entitled to the pay-out.
That's not unusual.
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I'd be quite surprised to hear of an insurer that would sell a policy to someone for an employee they no longer had.
This is something that I heard about on the radio today. So I can't name sources other than what I heard on Sirius Satellite Talkleft channel.
Nothin' new, or sinister about it - its commonm and long has been. An employer with an investment in the recruitin', trainin', and experience of an employee has every right to protect that investment. The death of an employee easilly can have negative financial impact on an employer, often to significant extent. Such insurance is simply good, prudent business practice. It isn't cheap, so is not engaged lightly. If your employer thinks you're worth insurin' in that manner, your employer thinks pretty highly of you and the job you're doin.
The employee insured by the company against loss of service, hard as it may be for some to grasp, is an entirely disinterested party. The employee makes no contribution to the fundin' of the insurance policy, and stands to no benefit in the event of the realization of the insured loss.
Now, if your employer has such a policy on you, before ya get to feelin' too special, its a lot like a farmer insurin' his livestock.
It's old news - I think they used to call it janitor's insurance, or some such. It still sucks. If my employer did this, and I assure you I would know, I'd see about taking out a policy on him.
I'm very surprised that the law allows you to take out a policy on someone without their approval. I think this crosses the line. It's in the category of corporations starting to have the same rites as people. I don't need to get into my anti-corporation views.
Roverroad, please, blow some steam off on the multinationals- I would love to read it.
Is that literally a quote from GW Bush? If it is, then that takes the cake.
Do you have any others?
I don't see what the problem is.
An insurance policy is a business deal between the policy holder and the company. The purpose is to protect an investment. The terms of the policy are no one elses business.
How does this harm you (as long as they don't do anything to cash in on the policy)? If you are especially valuable it is good business sense.
I placed a bet on the patriots in the Superbowl. The Patriots had nothing to say about it.
I don't think this should be illegal.
So, I'll place a bet with Don Vito that my boss WILL last out the week.
roger wrote:It's old news - I think they used to call it janitor's insurance, or some such. It still sucks.
It is called 'Dead Peasant's Insurance'...
Quote:Right now, your company could have a life insurance policy on you that you know nothing about. When you die -- perhaps years after you leave your employer -- the tax-free proceeds from this policy wouldn't go to your family. The money would go to the company.
What's more, the company might use this policy to pay for retirement benefits and other perks not for you or your fellow workers, but for your company's top executives.
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Most states also have "advise and consent" laws that technically require companies to get workers' permission before buying life insurance on them. But attorney Myers said many businesses circumvent these laws by purchasing the insurance in one of the states that doesn't require notice or consent, including Delaware, Georgia, New Jersey, North Carolina, Pennsylvania and Vermont.
Nice thought. You CEO decides that in order to boost the bottom line it's 'check-out' time.... those damn terrorists have been planting anthrax all over our premises, good thing I was on holiday that week...
ebrown_p wrote:I don't see what the problem is.
An insurance policy is a business deal between the policy holder and the company. The purpose is to protect an investment. The terms of the policy are no one elses business.
If they can insure the position that's one thing. I don't have a problem with that. But they have no business insuring someone's life without their permission. I don't see a problem if they get permission. It's this secrecy thing that I'd object to.
NobleCon wrote:
Is that literally a quote from GW Bush? If it is, then that takes the cake.
Yes, it is an actual Bushism. There are several web sites that have Bush quotes like that. Just Google "bushisms.
roverroad wrote:If they can insure the position that's one thing. I don't have a problem with that. But they have no business insuring someone's life without their permission. I don't see a problem if they get permission. It's this secrecy thing that I'd object to.
I agree - we don't live in the middle ages or early times of industrialisation anymore, where workers were owned by their employers.
if i took out a life insurance policy on george w bush, how long would it take for the secret service to visit me?
as timber states below, itoo would be just looking out after my investment since bush actually works for me in his job.
"The death of an employee easilly can have negative financial impact on an employer, often to significant extent. Such insurance is simply good, prudent business practice. It isn't cheap, so is not engaged lightly. If your employer thinks you're worth insurin' in that manner, your employer thinks pretty highly of you and the job you're doin."
And at what point does your NOT dying have a 'negative financial impact'? When you're running the harassment case or just spilling the beans to the Federal investigators?
The majority of these have been taken out by Walmart - how many of their employees are SO important that losing them would cause a company meltdown?
It is common for those in business to insure themselves against loss of a valuable colleague, partner, employee, associate etc. The question I have is whether it can be as alluded: secret.
I believe it is illegal in all 50 states to take out a life insurance policy on anyone other than yourself or your minor child without the consent of the person insured. In other words, I don't think it could be done secretly. It would have to be included in the published and distributed personnel policy or the employee would have to formally consent.
The mischief that could be accomplished by taking out secret lucrative insurance policies on others and naming yourself beneficiary is why I think it is most likely illegal that it can be done.
Re: Employers setting up secret life insurance policies on y
roverroad wrote:Doesn't it disturb you to know that the company that you work for, or one that you may have worked for in the past may be able to take out a life insurance policy on you without your knowledge, and cash in upon your death?
Yes. I would hate to think I work for a company that stupid.
Insurance policies are gambling. On mass the insurance company always wins because it calculates the odds. A company that insures its staff is buying in bulk mass. Ergo they
will lose money on it.
I would hope any company I work for would be smart enough to calculate this themselves and simply set up their own "insurance" for their employers by setting aside money from the central office to cover random deaths in subsidiary offices.
Don't find the company sinister and evil, they're just greedy and stupid. Laugh in their faces instead of protesting.
It is legal, Foxfyre - secrecy and all. This was a Wall Street Journal topic some 5 or more years ago.
watchmaker's
Life insurance policies make sense when a person's contribution to a company is worth more than the policy.
To attract investment in a small business, it is usually a requirement tha the key players are all insured. If a part of the core team of a startup that you are funding dies, it is a big loss. It makes sense to protect against this.
You may be right Roger, but we should look at the legality of it everywhere. I'm not saying it isn't done. It was just my understanding that it is illegal to do so. I'm reasonably certain that is the case in Texas and New Mexico for sure.
The following is already archived in the Houston Chronicle, but I found it posted on another site:
Quote:Companies routinely take out secret life insurance policies on the lives of their low-level employees and collect thousands of dollars when they die. The families never know the policies are in place and typically receive none of the money.
The policies are called corporate-owned life insurance policies or COLIs for short. But they're better known in the insurance industry as "dead peasant" and "dead janitor" policies.
While many companies buy life insurance on their key officers, so-called "dead peasant" policies are different because the deaths of low-level employees do not affect a company's financial health.
Those kinds of policies are not permitted in Texas anyway because the state Legislature did not want to create an incentive for murder or wagering on human life. But many employers continue to buy them, expecting no one will ever find out.
And they generally don't because there is no way to tell if an employer has taken out a policy on a worker's life.
Entire article here:
http://www.freerepublic.com/focus/f-news/666837/posts
Apparently there are some lawsuits floating around out there on this issue. How those are adjudicated will no doubt have a bearing whether thiese kinds of policies will continue to be sold.
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