Timber writes
Quote:However, for an employer to insure against the unplanned disruption and expense which would accompany the recruitment, trainin', and assimilation of an individual as would be required by the unexpected demise of an experienced, productive employee is simple good business practice.
I don't think anybody disagrees with this. Nor do I think corporations are taking out secret insurance policies on such personnel as I am quite sure personnel at this level are aware of their value and the insurance involved with that.
But really. How much expense goes into the recuritment, training, and assimilation of a Wal-mart greeter? How much business disruption occurs if the old boy kicks off during the night?
Yeah, where there's money, there's abuse. That's a given. I object strongly to the abuse, but I object strongly as well to those who fail - or refuse - to see the legitimate application of the practice.
And as general reference, I ain't particularly fond of WalMart - in any respect other than its stock is and has been a pretty good investment.
roger wrote:Ah, but fishin', that does sort of imply the employees were aware of the policy, and that's the issue, isn't it?
Yep. It certianly does mean the employee knows about the policy. I didn't suggest otherwise.
My caution is that when people start pushing their Congressional reps for things some have a habit of not being 100% clear on what it is that they want and Congress could very well end up enacting someting that would end up screwing a lot of people in the end.
I have no issue with eliminating the secrecy. I would have an issue with a law that bans employers from buying the policies altogether though.
Life Insurance
Yeah, it's called "Key Employee" life insurance policies, but isn't allowed on just anyone. Legally, in order to have a life insurance policy on someone there must be "insurable interest" meaning if they were to die you suffer some economic hardship that the policy is designed to "indemnify" or bring back to before the hardship. You can't get a life insurance policy on Britney Spears or Al Pacino. Key employee life insurance is designed to cover the costs of loss of revenue due to loss of person and the cost of finding and training a new employee. However, this can't have an unlimited amount of benefit payout like it can on yourself. The amount of payout the employer can have is only as much as it will take to indemnify their loss.
Re: Life Insurance
jonesy wrote:Yeah, it's called "Key Employee" life insurance policies, but isn't allowed on just anyone. Legally, in order to have a life insurance policy on someone there must be "insurable interest" meaning if they were to die you suffer some economic hardship that the policy is designed to "indemnify" or bring back to before the hardship. You can't get a life insurance policy on Britney Spears or Al Pacino. Key employee life insurance is designed to cover the costs of loss of revenue due to loss of person and the cost of finding and training a new employee. However, this can't have an unlimited amount of benefit payout like it can on yourself. The amount of payout the employer can have is only as much as it will take to indemnify their loss.
It gets back to my original point where I can understand an employer insuring the position, but not the person. If the person gives permission that's fine, but I have no problem with insuring the position. If that can be done. The original story made mention about a store owner who insured his clerks without their permission. The laws have probably changed since then, either that or the story is a fraud.
Maybe the law has changed, maybe not, but the story is no fraud. Do a quick google on "walmart "dead peasants", "dead peasants", or "janitor's insurance". This isn't Key Man Insurance.
The thing about Wal-Mart doing it is, look at the age of the greeters. Look at the type of life most of the employees lead (low income, pooer housing, poor eating habits, less likely to get medical attention, etc)
The policies would actually pay off pretty quick by comparison to a Wall Street firm insuring an executive secretary.
roger wrote:Maybe the law has changed, maybe not, but the story is no fraud. Do a quick google on "walmart "dead peasants", "dead peasants", or "janitor's insurance". This isn't Key Man Insurance.
Ah, yeah I jst noticed that. And of course "dead peasants" insurance is illegal for the reasons I outlined in my last post, which is why Walmart was sued for it. Walmart isn't known for being the most ethical of businesses. More about it here:
http://moneycentral.msn.com/content/Insurance/P64954.asp
squinney wrote:The thing about Wal-Mart doing it is, look at the age of the greeters. Look at the type of life most of the employees lead (low income, pooer housing, poor eating habits, less likely to get medical attention, etc)
The policies would actually pay off pretty quick by comparison to a Wall Street firm insuring an executive secretary.
Getting a life insurance policy on someone that old is extremely expensive, they probably bought it at group rates.
I believe there is a tax angle. Ordinary income is taxable; I believe payouts on life insurance are not.
Come on, jonesy. Squinney saved you the trouble of googling. Now show us why you say the practice is illegal, then or now.
timberlandko wrote: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.
'Dead peasant's insurance'. Here you see the rationale (b**lshit) for the legal theft from the working class by the rich. Another case where the law enables the criminal. The guilty actually becomes protected by the law. They made the law.
Agree, Amigo. I first read about this scam in the Wall Street Journal. Commie pinko rag!
Corporate America and the government have become like a parasites. They have become one in the same. We can't just enjoy our life without them trying to find new and inventive ways to steal your money. There like a crackhead that steals your car stereo only their wearing a suit and their already rich.
roger wrote:I believe there is a tax angle. Ordinary income is taxable; I believe payouts on life insurance are not.
Come on, jonesy. Squinney saved you the trouble of googling. Now show us why you say the practice is illegal, then or now.
Because there is no insurable interest to the degree of Walmart losing $70,000 when their stocking person dies. Yes they may lose some money due to having to find a new person and retraining them, but not as much as the policy pays out for. Without insurable interest it becomes the same as gambling, or wagering a bet that their employee will die and either collecting or not collecting on it. Gambling is illegal in almost all states.
jonesy wrote: Gambling is illegal in almost all states.
If this is the basis for your theory then you are on thin ice. There isn't one single state in the nation that doesn't allow gambling in one form or another. 37 states + Washington DC have lotteries (legalized gambling) for example.
insurance companies watch their group life insurance payouts VERY CAREFULLY !
if any particular group policy loses money to the insurer, the insurance company will raise the premiums at the next anniversary or cancel the policy.
even walmart would have a slim chance outfoxing an insurance company because the insurance company would be losing money quickly if they unterwrote at a loss. while for group life insurance policies it is the usual practice not to insist on a medical for the participants, they do calculate the risk - and therefor the total premium - based on the various ages of the participants. so that if there were a lot of people of "advanced age" in the insured group, the insurance premium would be representative of the "group age/risk"; which means it would be pretty high.
i worked in the life insurance business for close to thirty years and i can assure that life insurance companies don't like losing money. an underwriter accepting undue risk won't keep the job for long. hbg
ps. a little anecdote : about 30 years ago two elderly gentlemen appeared at our headoffice and presened a life insurance policy showing them as beneficiaries. the life insured - their uncle - had died and they were ready to cash in. we had to tell them that the loving uncle had ceased paying the premium shortly after he took it out - it had lapsed long ago. the two prospective beneficiaries wer plenty made at the insurance company. they felt it was the company's responsibility to make sure uncle would pay his premium every month ... kinda felt sorry for the guys.
All insurance is gambling. Insurance is permitted in all 50 states.
Can't think of the word I want to use - too late for my brain to function - but would it be financially beneficial to the insurance companies AND WalMart if it were ... Term? Not sure that's the type policy I'm thinking of or not, but the insurance companies would essentially be making money by having the bulk group premium payment to invest over the years and earn interest. Walmart would have the business expense write off, and the "free" money when an employee(s) die(s).
What would an approximate payment be for a $350,000 policy on a 50 year old smoking female? (That's the walmart business expense and how much the insurance company has to invest) Then, how much interest would the insurance company make on that payment over the course of 10 years? 15 years? 20 years? Now multiply that by the thousands they insure.
Does it look like a good deal for walmart and the insurance company?
well, it would be unusual for both business partners to make money at the same time. the insurance company wants to be paid for carrying the risk (and make at least a little profit on top of it - insurance executives like to make good money - and the conventions are usually pretty fancy affairs too. made my first trip to florida with mrs h courtesy of my employer, went to spain, new york - several times ... and i was not one of the senior execs).
anyhow, walmart can't get more money out than they put in or the insurance company goes belly-up, right ? their only advantage would be to receive payments upon death of an employee. i wonder how mch of a difference it would be to walmart's cashflow to receive those payments, can't be much, can it ? in the meantime they've paid all those premiums.
i've been out of the business for twenty years, so i'm not up-to-date on what's going on in the business right now, but i have difficulty seeing how walmart could gain in this deal - except for the actual insurance payments - for which they have had to pay the premiums every month. hbg
