The Thursday Blog: Dead Peasants Edition

Back in the mid-’80s, it became a fad for certain larger employers to purchase insurance for their employees. Now these were companies who typically (and concurrently) only paid for half of employee insurance, so the fact that they were paying for the whole thing looked like a pretty good deal. There were only two problems.

One: none of them actually told their employees that they had purchase insurance for them.

And two: they didn’t buy them health insurance. They bought them life insurance. (Two and a half: the companies all named themselves as the beneficiaries.)

Understandably I feel, some folks got upset when they discovered that the place they went to work every day would get a secret payoff when they died. That kind of thing just seems suspicious. It got worse when documents came to light in a tax fraud case against Winn Dixie naming the 36,000 policies they had just purchased as “Dead Peasant Insurance”. Some folks just didn’t think that sounded respectful.

The benefit to the company extends beyond the payoff too. Wal-Mart may have collected $300,000 (tax free) when Mike Rice died on the job of a heart attack, (which wife Vicki Rice attributes to on-the-job stress) but even before then they were earning tax-deferred returns on his secret life insurance, and taking out tax-free loans against the value of the policy. This last was where Winn-Dixie got into trouble, when they were using the loans against the policies to “create” tax-free income which they were then using to pay the premiums on the actual policies. The IRS didn’t approve.

Congress tried many times to put up legislation to curtail the practice, but each time the efforts were derailed by howling lobbyists of the insurance industry. In 2006 Congress was finally able to nationalize a law that many states already had in place, requiring businesses to inform employees when an insurance policy was taken out on them. Before then the company and the insurer had to send representatives to meet and sign papers over lunch in a state that did not require such disclosure. (Delaware, Georgia, New Jersey, North Carolina, Pennsylvania and Vermont.) The law has continued to be battered away by insurance interests, and now only banks are obligated to provide their employees with the information. And do notice that at no point did I say permission. You do not have any actual say in the matter. Even quitting won’t help, since once the company is holding the policy on you, it belongs entirely to them no matter what you do. (There was briefly a law that disallowed companies collection on a deceased employee that died a year or more after terminating employment, but it didn’t last.)

So do you have a secret life insurance policy on you? Are persons unknown going to profit from your death? Asking is not always the best idea, since these companies are extremely secretive about the practice, and this is not a good economy to be jobless in.

I have found a list of the top purchasers of dead peasant insurance for you. (Also known as janitor insurance, or Corporate Owned Life Insurance. COLI also includes executive insurance, which is a much less illegitimate practice.) This list is far from complete, but it is certainly interesting. There were at least two on here I myself had worked for. (This list is taken from the McClanahan/Myers website.)

ADAC Laboratories

Advanced Telecommunication Corp.

Aeroquip Vickers Inc.

Alabama Power Co.

Alfa Corp.

Allegheny Technologies Inc.

Allergan Inc.

Allfirst Financial Inc.

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.

57 Responses to The Thursday Blog: Dead Peasants Edition

  1. Wow, just wow. How low can you go?
    Can’t believe this shit is legal, and you can’t even sue the basterds 🙄

    • Your best recourse is to live until you are 100 so that they have to continue paying premiums on that policy as long as possible. I’ll be doing my part! 😀

    • Well, this is disgusting, but not very surprising.

      The goal of most businesses today is simple, after all: Make the most money possible in the shortest time possible by all the means possible. Even when, in the medium to long run, it is not a safe bet for them.

      If they could legally put you in situations that actively led to your death, they very probably would.

  2. Setting aside any financial playing around to get stuff for free, why is this so bad? Is it because the company gets rewarded for having you do potentially lethal stuff?

      • Yeah, sure, but they don’t follow the law, and I’m thinking even the Land of the Free (corporations) has laws protecting worker’s rights not to do unneccesarily dangerous stuff?

      • Hmm, on the other hand, you can just fire someone whenever you want in the US, right? Not sure if it works like that, but if so, I can see that this is a problem.

        • In the first 90 days many states will allow you to fire an employee without cause. (It is called, paradoxically, Right to Work.) After that, they need an excuse.

          • I bet Ozymandias had life insurance not only for all his employees, but for the whole of NYC!
            That’s why he’s the smartest man. :mrgreen:

              • So? Does a millionaire really need more money to live a fat, quiet life? The richest people always seem to be the greediest(though one usually have to be greatly motivated by greed to strive for extreme riches).

                Besides, you’re not fooled by his talk of lofty ideals and world peace, are you? Obviously it was just a big fraud for insurance benefits and tax deductions.

  3. Reminds me of a woman serial killer from the USA with quite the same Modus operandi, somewhere around the late 19th century, whose name I can’t remember.
    It’s good to see that what gets a solitary woman to the executioner gets nothing to a businessmen, even if they hadn’t butchered anyone of their employees, yet…that we know of.

    Can anyone take a life insurance on anyone else without their knowledge or agreement in the USA? Makes you wonder if the guy swiping your car on the road has some other reasons besides being an asshole.

    • Well, here’s a simple comparison.

      A criminal wil, say, steal goods in 10 houses while people are away, then get caught. The people will suffer from this, but, well, their insurances will probably refund them, and they’ll still have their bank accounds and jobs.
      Nonetheless (and this is, IMO, right), he’ll probably go to prison, with a harsher pain if his victims are rich and powerful (because they’ll have big advocates to avenge them).

      We all know what the banks did. Millions of people not only lost their houses because of it, they also lost their jobs, money… everything. I’d be really surprised if some didn’t commit suicide.
      What are the risk of any bank executive going to prison for that?

  4. That is pretty interesting.

    I think that the most important part of this is that they are taking out loans to pay for the policies and writing it off against tax. Without that, they don’t get the free money for deaths of employees.

    I think that in the UK you can’t take a policy out on any other person without their permission. This does however lead to stories of newly-wed trophy wives taking out life insurance for their elderly husband by seducing them into signing 😉 .

    • Well that’s just part of the normal procedure of trophy wives, nothing new about that. Of course they get lots of money out of it even if they didn’t have insurance, since they were legally their spouses, which is the whole point to begin with.
      Oops, sorry, I meant to say they love and cherish them dearly, and would be quite sad when they died. True love.

      It’s funny though how, despite not being highly thought of, they still get a lot more respect, credibility and legality than other “common” whores.
      Prostitution is illegal in many places, but I don’t think there are any laws or action taken by law enforcement agencies against this brand.

      • Insurance payouts are independant of pre-nups, wills, and local laws regarding sharing of property upon termination of a marriage. An said wife could keep the policy up even after she’s traded in for a younger model.

      • A quick reminder of a well-known story (IIRC, it was even told here a few days ago):

        A man meets a woman at a bar.

        Thinking she’s pretty fine, he asks her:
        Man: Would you sleep with me if I offered you a million dollars?
        Woman: Why… er… Yes, I guess, of course!
        Man: Fine! Well, then, will you sleep with me if I pay you one dollar?
        Woman, outraged: What kind of woman do you think I am?
        Man: Please. I think we’ve already established that. I’m just negociating the price.

    • “[Winn-Dixie was] using the loans against the policies to “create” tax-free income which they were then using to pay the premiums on the actual policies.”

      Why does the word “Ponzi” come to mind?

      • The real problem is the laws and system that allow such absurd things to happen. It seems like the whole of the modern world’s economy rests on ridiculous laws that let you make money out thin air, but the money is also just thin air and promises. There’s no hard cash, just empty promises, and when the promises get too exaggerated it comes crashing down.
        I don’t understand half, or all, the things that go on with the stock markets, banks etc, nor trust them.

        • Problem, when it crashes down, it crashes down with real weight.

          In the recent crisis, the money was maybe out of thin air, but, aside from the real economic consequences, we stil had to cash in with “real money” to refund the banks.

          Now that I think of it, “recent crisis”… It sees like a comic book universe, with one world-shattering crisis after another. Thing is, there’s no superhero to take the bad guys to jail.

  5. The only thing that I see as a problem is that all the money used to buy policies could be instead used to pay higher wages.

    I do not see a problem with a company wanting to protect an investment. As long as I (the employee) do not see a reduction in my salary or position and or benefits, and it does not affect my family.

    I personally do not think this is a good practice and do not endorese it but it certainly is a clever business practice to recoupe loss possible income when a worker leaves. They are all blood sucking money launderers anyways right?

    • I think the bigger problem is that this leads to a certain side’s interests to lay on you, the employee, dying horribly as soon as possible. That might just make companies go easy on safety regulations, or just plain kill you.

      Damn, I’m starting a coal/whatever mining company in China and will insure all the miners for free, especially the little kids! Muahahaha, see you on my solid-gold private island, suckers! 😈

    • It think there are two issues here.

      The first is that the company who profits from your death controls your daily actions. Even if no one ever abused this at all, it’s creepy as hell.

      The second is that they do it in secret. This compounds the first issue by a factor of about a thousand. Not good news.

      • “The first is that the company who profits from your death controls your daily actions. Even if no one ever abused this at all, it’s creepy as hell.”

        And they keep the policy even if you no longer work for them. The’s even creepier you could die and end up paying off more than one company…..

        Make me glad to live in Canada where i’m sure this is not legal.

        • “Make me glad to live in Canada where i’m sure this is not legal”, typed Cherub on his computer, then clicked to submit the comment.
          A shadow danced in the corner of his eye then, but before he could turn around the stealthy Mounty ninja was already upon him.

      • The best proof that there’s something fishy and that, at least morally speaking, it ain’t perfectly right? If it was perfectly fine, they wouldn’t feel the need to hide it and go to such lenghts for it.

  6. Sonovaduck. o_o (Yes, I actually use that phrase as a profanity.) This is despicable, but quite clever. A shame that the person or persons who thought this trick up did not decide to apply their twisted genius for the greater good of humanity at large, rather than the fattening of off-shore bank accounts.

  7. As Kevin alluded, the practice of insuring employees first started as a hedge against losing a “key” employee.

    Since the income on it is all tax free, that means more tax burden on the rest of the population to maintain the same level of services.

    The way I see it, though, “dead peasant” insurance should be allowed—with the caveat that if the employee is ever laid off (not fired for cause, although the company should have to prove the cause and it should be a serious one, like drug use while operating heavy machinery, not taking a few too many restroom breaks), then the policy must be cashed out and the total value of it included as that employee’s severance pay.

    After all, if the employee is laid off, he or she could not have been a “key” employee, and to keep (or even having taken out) the policy would be tax fraud. The corporation should not be rewarded for that. 😈

    Yeah, I don’t think much of corporations these days. Thomas Jefferson thought that the maximum charter life on a corporation should be forty years and I’m inclined to agree.

    • I’d be more okay with it as well in the company could only collect what that downtime between the employee’s death and a new hire was actually worth. $300,000 to replace an assistant manager is all out of whack.

      • You can’t put a price on a man’s life! *sob* See? And you thought those high executives were all cold and calculating.

        Hmm, I know “executive” is sometimes shortened as “exec”, but now it could also mean “executioner”.

        • Well, actually, you can. Georges Bush did it.

          It’s been a long time, so I may have the specifics wrong, but, IIRC, it’s something like this:
          There’s anti-pollution laws. You’re supposed to obey them. GWB allowed to pay in order to ignore them. The fine is determined by the number of people your pollution can kill. So, if, say, your pollution could kill 10 people and you’re fined 100 000$, then one man’s life is worth 10 000$.

          • Placing a dollar figure on human life is fairly common I think. We got a peek inside the airlines’ calculations a few years back as they were determining what new safety features to include on their planes. This problem would likely kill x number of people which would cost the company xy dollars… however making the fix would cost xy+z so they decided not to do it. The shocking part to me was that the federal government accepted this as legitimate math. I understand there’s a point of diminishing returns here, but I’d bet the passenger’s point rests somewhat north of the airlines’.

  8. Well, the real problem is, that these corporations exploit a legal aspect, that was intended to protect the “common” man. The man/wowan who earns a small paycheck and puts some money aside was intended to be protected somewhat from inflation on money he does not spend close to when he earned it. That’s why the payment towards a life-insurance is taxdeductable.
    Now neither the company nor the insurancecompany care for the fact if a single worker is alive or dead. If you have 36.000 policies this simply evens itself out. You gain some you lose some. BUT, the insurance company gets money from the purchasing company which they can invest (at banks); the purchasing company loans money (from a bank) and writes their policies of (all tax free); the bank gets money from the insurance company and loans it to the purchaser. So they all shuffle the money around and in the end get to keep everything taxfree.
    What does this mean for you? Since your employer does not have to pay taxes, the goverment has to pursue you even more viscously to get the money they need.

    So in all, although it’s morbid, your emloyer does not benefit from your demise, but from the mere existance of the policy. /hmm/ Unless they suddenly lose a statistically unlikely high number of employees. For example, when a plane crashes into your office.

    • I think you mean “viciously”, but I take your meaning.

      At it’s base, profiting from the untimely death of another… especially in secret… is all manner of unseemly. It sets off my visceral alarm bells and makes me eye the nearest exits. Our corporations have never proved worthy of trust, and this whole thing just seems like an incredibly bad, bad idea.

  9. I think that the real point isnt that someone made a policy, and then cashed in.

    Very legal that.

    What we are missing is that in the example given, the persons wife claimed that the company that profited was the same company that killed him by driving him into the ground with stress.

    Which if you were a dectective and saw that a mans wife died shortly after he took out a massive policy on her, would be considered “bad.” here its “business.” In fact, no further investigation needed.

    Suddenly the example given earlier about insuring your armies soldiers isnt as ironic.

    Neither is this example. Insuring the lives of the soldiers on the other side.

    Its one hell of a way to pay for a war. The better your side does, the more profit you make!

    Yeah. Im Canadian. But only in America could this happen… (as the saying goes)

    • Exactly.

      It’s surprising the amount of things a company can get away with, compared to a common (wo)man.

      I’d had that, with the lot of pressure companies can put on their employess simply with the fear of job loss (here goes stress!), sometimes using that to make them accept worse work conditions and lesser pays (in order to “save their jobs” 😆 ), it’s a very good investment: They make money while you’re alive, even more if you die…

  10. Aside from the possibility of committing insurance fraud by means of manslaughter this is only one of many, many tools that corporations use to protect themselves from paying taxes. Let me clarify: People with money don’t pay taxes–they spend money on lawyers, accountants and loophole exploitation to avoid paying taxes.
    Feudalism isn’t dead, it just moved to a new design when industrialization killed the old landlord-serf system.

  11. Fun fact, I used to work for them, Alabama Power, Mississippi Power, Georgia Power, Florida Power, and Southern Link are all owned by Southern Company. Since 3 of the 5 showed up in that list, I’m going to assume that it’s SouthernCo’s policy rather then any of the specific individuals.
    Trust me when I say that many of the higher ups aren’t THAT bright.