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Michael Moore Has A Point About Corporations Who Purchased Life Insurance Policies On Their Employees

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The information you are about to read will likely affect your thoughts about any company that you have ever worked for. But, be prepared. This story is more about questions, than it is about answers.  

Peasant: An uneducated person who does not have a lot of money. 

Life Insurance: A legal agreement where an insurance company receives premiums and, upon the death of an individual, pays a predetermined amount to a designated beneficiary.   

How could those two divergent definitions be joined? Many corporations found a way to do so. 

Sometimes we don't get to see a movie while it is in the theater. Other times we don't immediately watch a flick we may have purchased, or recorded. Recently, I watched a movie that came out over a year ago. Its plot revealed an unbelievable, yet factual, piece of information that is likely affecting countless workers everywhere.

Many well-known corporations bought life insurance policies on their employees, without their knowledge or consent, and have been collecting payments upon their deaths. These payments were received regardless of whether the deceased person was a current, or a former employee.

How can those actions possibly be legal? Well, they were. Why has so little information been available about these matters? A list of the companies who are believed to have taken part in this practice might reveal that answer. 

Winn Dixie Stores is believed to be one of the companies that pioneered this practice. That company bought life insurance policies on tens of thousands of employees in 1993, naming itself as the beneficiary. The actual phrases used to describe the employees in the policy documents were 'dead peasants' and the policy type itself was referred to as 'janitor insurance', which not so subtly reveals how the employees were thought of. None of these human beings were peasants and hardly any provided janitorial services to the companies they worked for.  

The role of insurance companies in these ghoulishly greedy morality plays is obvious. So, there seems no need to waste any further space detailing why they chose to swim in these rich premium streams with their corporate customers.  

These policies were originally bought to insure high level, executive, employees. Back office types must have jumped head-first through the legal loopholes they poked open when they began buying similar policies for rank and file employees. The secret nature of these pursuits seems to indicate full awareness that, if asked for consent, an employee would have no motivation to allow their employer to name itself as a sole beneficiary for a life insurance policy taken in her, or his, name.

In this video, a widow discusses a life insurance payment of $1,579,399.10 that was made after her husband had died of brain cancer. That sum was not paid to her, but instead to his surviving employer!

Due to numerous lawsuits, new federal and state laws began to be passed in 2006. Those laws required a company to provide information about and obtain consent from employees for these types of policies. No consent, no policy. Prior to 2006, only banks had been required to disclose certain information about these life insurance policies to their employees.

What is unclear is if any of the new laws have had an  impact on policies, bought prior to 2006, that are still in effect. Also, are payouts continuing to be received from those policies?  

The movie referenced earlier was Capitalism: A Love Story, which is a Michael Moore production. Whether you like him or not, there is no denying the information he presents in the film about this specific topic. However, if you choose not to accept it, then you should at least pursue information on your own.

Search any documents your company may have given you about life insurance and see if there is any mention of this type of policy. But, the Catch-22 involves a lack of information. Because if you don't know if a company has such policies, why would you assume that they did? If you want to take that leap and assume they do, how do you ask questions without potentially making yourself a target of office politics? 

There is a safer route. Conduct an internet search about this topic. The internet is such a vast resource that it must definitely provide access to many useful links about this bizarre money scheme, right? Don't be so sure.

At the end of this open story we are reminded of two age-old pieces of wisdom: Never underestimate the power of human beings to do good. Never forget the ability some have to do the opposite.     

Contact Sean O'Brien at sobrien@philly2philly.com

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