Are 'Dead Peasant' Life Insurance Policies Fair?
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Text Size- / +By CLAIRE SHIPMAN (@ClaireShipman) and CHRIS STRATHMANN
Oct. 2, 2009
Life insurance used to be rather straightforward, known for offering security to loved ones in a tough time.
So when Irma Johnson learned that her husband, Daniel, who died of brain cancer, had been insured for $1.5 million, it should have been at least a small comfort.
But she did not receive the money. His employer did.
~
Dozens of blue chip companies have these policies, according to Myers. But only banks are forced to reveal them, and several have billions of dollars worth of policies.
"The driving force behind it is the tax deductions," he said.
ABC News Photo Illustration
In the corporate practice dubbed "Dead Peasants" life insurance, companies wager on employees' lives, expecting to make money when they die.The life insurance policies were designed to allow companies to insure a few crucial executives. Savvy companies then realized they could also get a tax break by insuring many lower-level employees.
The financial scheme doesn't actually cost the employees anything, except, some say, their trust.
Betina Tillman felt shocked and deceived when a reporter from The Wall Street Journal told her that her brother, a music store cashier, was insured by his employer for $339,000 when he died, despite the fact that he no longer worked at the store.
Employers Collect Life Insurance on Employee Deaths, 'Dead Peasants' Life Insurance - ABC News
I think I will visit the nursing home and take out a few policies on some old farts.
The payoff is tax free for corporations.
Share126 Comments Print
Text Size- / +By CLAIRE SHIPMAN (@ClaireShipman) and CHRIS STRATHMANN
Oct. 2, 2009
Life insurance used to be rather straightforward, known for offering security to loved ones in a tough time.
So when Irma Johnson learned that her husband, Daniel, who died of brain cancer, had been insured for $1.5 million, it should have been at least a small comfort.
But she did not receive the money. His employer did.
~
Dozens of blue chip companies have these policies, according to Myers. But only banks are forced to reveal them, and several have billions of dollars worth of policies.
"The driving force behind it is the tax deductions," he said.
ABC News Photo Illustration
In the corporate practice dubbed "Dead Peasants" life insurance, companies wager on employees' lives, expecting to make money when they die.The life insurance policies were designed to allow companies to insure a few crucial executives. Savvy companies then realized they could also get a tax break by insuring many lower-level employees.
The financial scheme doesn't actually cost the employees anything, except, some say, their trust.
Betina Tillman felt shocked and deceived when a reporter from The Wall Street Journal told her that her brother, a music store cashier, was insured by his employer for $339,000 when he died, despite the fact that he no longer worked at the store.
Employers Collect Life Insurance on Employee Deaths, 'Dead Peasants' Life Insurance - ABC News
I think I will visit the nursing home and take out a few policies on some old farts.
The payoff is tax free for corporations.
