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"The people who cast the votes don't decide an election; the people who COUNT the votes do." -- Joseph Stalin

Sunday, October 4, 2009

Dead Peasant Insurance Exposed

In the movie, "Capitalism, a Love Story", Michael Moore exposes a sinister secret that has been part of the American corporate world for some time now -- DEAD PEASANT INSURANCE. Your boss wants you DEAD. It seems that major corporations in America have been secretly buying life insurance policies on their employees, especially the low-level ones. You die, they win, even after you leave the company. If I bought a life insurance policy on my neighbor, I would have a vested interest in his death. How is this any different?

Here is an example:

This practice has been kept a secret for many years. Here is the reaction of ABC News analysts:

Among the corporations that have bought such insurance, nicknamed "janitors' " or "dead peasants' " insurance, are AT&T, Dow Chemical, Nestle USA, Procter & Gamble, Walt Disney and Wal-Mart. Corporations gain not merely from the tax-free life insurance benefits they receive when current or former employees die but also can borrow money against these policies. Many companies even deducted the interest on these loans from their taxes.

In 1996 Congress moved to limit such deductions, and the IRS has sued some 80 corporations, including Winn-Dixie and American Electric Power, to collect back taxes on such loans. Still, companies benefit. They are not taxed on gains within a life insurance policy; in effect, these policies amount to tax-free investments for businesses.

Critics have compared these life insurance policies to those purchased by some American slaveholders on the lives of their slaves, who also were unaware of such policies held by their owners. Finally, someone is going to do something about this practice which at the very least is immoral and should be illegal.

Finally, Rep. Luis GutiƩrrez (D-Chicago) is raising a red flag. He chairs the U.S. House Subcommittee on Financial Institutions and Consumer Credit. This week GutiƩrrez introduced a bill that would ban employer-owned life insurance unless the worker earns at least a million dollars a year from the company. He presented the legislation Wednesday on the House floor.

In a nation where millions of full-time workers have no health insurance, maybe if we prevent companies from betting on the death of their employees, they’ll invest in the health of their employees.

For violations, the bill would provide civil and criminal remedies.

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  1. Great post, clear explanation of the financial reasons why they've been taking out these 'dead peasant' policies. Love the quote from Rep. Gutierrez, hope the bill goes through.

  2. I get the tax problem, but I'm not sure why the practice is immoral. But then I know something you don't - that the vast majority of these programs were designed so that the insurance element was irrelevant. Premiums were periodically adjusted so that deaths did not give rise to gains. Only the tax benefit mattered. So it's no more or less moral than any effort to exploit a loophole that turned out not to be there.

    All the fuss is about the silly idea that employers were profiting on deaths, when just the opposite was true: the tax benefits accrued while the employees lived; a dead employee was one fewer tree in the orchard. But somehow the headline "Employers profit from employees' survival" just doesn't have that fun "Boss bites grunt" ring to it. But that's the inconvenient truth. (Where's Algore when we need him?)

  3. Hi,

    I commend you on your good blogging. I wonder if you'd take a look at my social justice blog "House On Fire: Thoughts on Saving the World" and perhaps sign up as a follower. I'd really appreciate it.

  4. I found your blog very informative about insurance policies and plans.


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