Employers take out Life Insurance Policies on their Employees
Is it right that employers take out life insurance policies on their employees? Most employees do not even know if their employers have taken out life insurance policies against them, and undertandably so: how could it feel to work for a company, knowing the company would profit from your death?
Most people had no idea that this practice was even going on until it appeared in the latest Michael Moore film, ‘Capitalism: a Love Story’, and was featured on ABC News (see the video clip from YouTube):
Ok, so it makes sense for companies to have a financial backup plan in the event of losing a key employee: projects may be delayed, recruitment costs must be covered, and temporary staff may be needed to fill in the gaps. So then tax breaks were offered to encourage this practice, and it has become far more widespread.
But I can’t think of many policies more likely to discourage employee loyalty, especially when you consider that the employers must have taken the life insurance costs into account when planning the employee’s salary package, and they have no intention of sharing any of the money paid out with the employee’s family.
Work harder…
Work harder…
Where is the motivation for Health and Safety now? Are companies banking on the life insurance outweighing the lawsuits?
What message does this send to employees who want to be loyal to their employers and feel that their hard work is valued? Instead, are they now realising that their employers will literally benefit from working them to death?
Genuine loyalty comes from a relationship where respect goes both ways. It shows very little respect for working people to take out life insurance policies against them without even telling them, and then to call these ‘Dead Peasants Policies’ is downright offensive. Are the people who come up with these ideas complete sociopaths?
So here’s what I’d do if I ran the zoo:
- Keep the tax break, with legal modifications.
- Let employers take out life insurance policies on their employees, with their consent.
- Limit the amount of payout that the employers can keep to a prearranged amount that could reasonably be required to cover lost work time and recruitment costs.
- Require any amount left over after that to be given to the employees’ families, or a charity of their choice.
- Allow the employees to add to the policy if they want to, as part of payroll along with tax and social security, with any resulting extra payouts guaranteed to go to their families or whoever they have chosen.
- Encourage loyalty and a long term relationship by having the employer and employees working together, taking advantage of the tax break for everyone’s benefit.
That way everyone wins – because anything else is just creepy.
I’m actually kinda OK with being able to take out insurance on anyone even random people, so long as you aren’t allowed to kill them in order to collect.
.-= Kelly W. Patterson´s last blog ..“Authorized by the President” isn’t the Definition of Legal =-.
Yikes – that’s just creepy. Call me idealistic, but I don’t agree that it’s okay for people to profit from the suffering of others. Nobody’s talking about actively killing people. Rather the issue is that with this type of insurance an employer may stand to gain more by _not_ looking after the welfare of its employees.
Ok, so let’s say a political organization takes out a massive life insurance policy on an opposing political figure, while distributing angry propaganda on its news channel – where is the moral line exactly?
In both those cases they would be responsible for the resulting deaths. In fact, with that stipulation, it could actually function as an incentive to ensure workplace safety. If someone dies because you didn’t properly maintain the machinery at your factory, you get nothing.
.-= Kelly W. Patterson´s last blog ..Ticketed for Parking in their Own Driveways in Toledo =-.
Taking out a life insurance on key employees is a prudent business practice. Playing the morality card is nonsensical…
I agree with the first part of your comment, up to a point. But I think morality is more important than just a ‘card to play’.
This insurance has everyone worked up for the simple reason that most people don’t know how it worked.
For the most part, it wasn’t insurance at all. Think about it: what insurance company is going to sell Wal-Mart 350,000 policies in a way that would let Wal-Mart profit from deaths? The plans were set up so that there would be no gain or loss from the risk element of the policies.
The gain came from tax rules that allowed companies in effect to deduct interest payments and then get that interest back tax-free. That game worked best as the cash value of each policy increased, that is, only while the employees lived. Each death was one less tree in the tax-avoidance orchard. Mr. Moore doubtless found that particular truth inconvenient.
As for the label “dead peasants insurance,” no one ever called it that until the media lifted the term out of context.
Thanks for the informed comment. That really does cast these policies in a different light, although I still think employees should have a choice in it, and even a chance to share in it, on behalf of their families.
It is good to finally get realistic info instead of the normal junk. You are using a valuable tool: Help others meet THEIR needs & you will meet your own needs in the process. That is exactly what we do at my office: Help others & we are generously rewarded for doing so. Thanks!
here is a joke I saw about companies insuring employees,
http://ponderingstuff.com/2011/06/04/life-insurance-drug-problems/