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Why is it legal for corporations to take out life insurance policies on their employees without their knowledg?

I couldn't take one out on you because i would have something to gain from your demise

Federal law says "In most cases, the owner of a policy* has to demonstrate that he or she is dependent in some way on the person whose life is being insured. This is known in the business as the "insurable interest" doctrine and has origins in common-law practice"

Clearly, your employer isn't dependent on you in anyway

So why is this acceptable?


@AC: No, maybe i wasn't specific enough, the corporations are the beneficiaries of the policy, when you die, they get the money, not your wife, family, cats or whatever they do

Update 2:

@Islam: No actually most people that are under these policies are entry level, rank and file workers

Update 5:

@Mutt: Well since you hold yourself in such low esteem, i don't either

Update 6:

@AC:" Hartford Life Insurance estimated that one-quarter of all Fortune 500 companies have COLI policies, which cover the lives of about 5 million employees."

You think all 5 million were executives?

Update 7:

@^Islam, sorry

Update 8:

@Islam: "Dead Peasant Insurance is sometimes used as a shorthand reference for life insurance policies that insure a company’s rank-and-file employees and name the company as the beneficiary"

Update 9:

@Mutt: I don't see it as about being me more than the people that are close to me, I can't name my girlfriend as my beneficiary but my job can be one? And most of these people under these policies are young and naturally aren't thinking about that kind of stuff, but their employers do and if they do die by from some unforeseen accident do their companies dish out a single dime to said persons family?


So it doesn't affect me because i'll be dead, but i'm not the type to think only about myself

Update 10:

@Mutt: This obviously doesn't apply to you or me, this is about the people who are unwittingly put under these policies and have their companies set up to benefit from their death.

Update 11:

Lol @Mutt: You killing me, it's not like they ask on a interview "So would it be okay if we took out a $100,000 policy on you, you know just in case" Like i said, it's not about us, why is it okay for these corporations to profit from the death of our people, it's disgusting.

Update 12:

For example Wal-Mart stores do this, not corporate HQ so it's safe to say no one making more than $10 a hour are set up to pay Wal-Mart after they die. You can view it however you want but if you die there making near minimum wage, chances are your family is screwed

7 Answers

  • 10 years ago
    Favorite Answer

    The Dead Peasant policy... I'm not mistaken, families of dead workers have sued over this, find out that company gets paid and they didn't get a dime from them. Call it what you want, but at the end of day it makes the American employee sound more like cattle, slaves and property more so than human beings.

  • Mutt
    Lv 7
    10 years ago

    My question is, why should I care? I'm not paying the insurance premiums, and it has absolutely no affect on my life or my job, so why should I care?

    *EDIT* - You haven't answered my question" Why should you care? How does it change your life? Would you life be different if they didn't do this?

    *EDIT2* - "if they do die by from some unforeseen accident do their companies dish out a single dime to said persons family?"

    This is a BENEFIT that companies give out. I don't know what companies you have been working for, but my last few job, all but one paid my family benefits if something were to happen to me, and it didn't cost me anything, unless I wanted to bump it up to more. The amount varied from company to company, and was my annual salary at one company (up to a max amount), 1-1/2 times my salary at another (up to a max amount), and now, a flat $50,000 (which I bumped up to 3 times my salary for an very small premium).

    So if you are concerned about your family not getting anything, you need to consider this when you decide to accept a job offer or not. The one job that did not offer this was during the last recession, and I accepted their offer, but I did so only until I found something in my field again. So I viewed it as a temporary position, and didn't go into it with long term goals, so the benefits were not as important as the current job I have now.

  • Anonymous
    10 years ago

    "Clearly, your employer isn't dependent on you in anyway"

    That is simply untrue. Those whose employers take out life insurance policies are usually key executives who possess singular knowledge regarding the company and its operations. The company would be damaged if he were to suddenly become unavailable.

    EDIT: From your own link: "Today, COLI is most common for senior executives of a firm, but its use for general employees is still sometimes practiced, primarily as a real economic transaction for Voluntary Employee Benefit Associations (VEBAs)."

  • 5 years ago

    Why does no longer that is? Their "insurable interest" is the time and money they have in the form of each worker.... and the time and money that is going to fee to interchange them. you are able to insure very virtually something for a cost. EDIT: they could have completed slightly extra advantageous on the nomenclature than "ineffective peasant" rules.... admittedly. EDIT #2: no person insures financial business enterprise tellers guy. yet they DO insure utility engineers.... presidents and vice presidents of companies, legal specialists, CEO's and those with difficult to discover and particularized wisdom. those certainly everyone isn't hardship-free to interchange. And sorry... that is not approximately "ideals" and "splendid or incorrect" or the rest relating "brainwashing." that's approximately money. era.

  • ?
    Lv 7
    10 years ago

    The answer is simple. Corporations own the government. Insuring employees is a cheap way to make money.

  • Ac
    Lv 6
    10 years ago

    So you are complaining that employees receive a FREE BENEFIT for their families. People complain that companies are greedy, and now you compllain because they arent. SHAKING MY HEAD

  • Anonymous
    10 years ago

    Because corporations are the reason that millions of people are moving out of poverty. 80% of the world used to be third world but now it is down to 60-65% thanks to corporations.

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