Are You a Dead Peasant?

How many jobs have you had over the years? Does your employer consider you one of their dead peasant policies? What you say, you have never heard of the dead peasant policies? A dead peasant policy is one that your employer may have taken out on you with or without your consent. The policy remains in effect even after you have left the company whether you quit or were fired and it is not your family that will profit from your death, it’s the company.

These policies came out years ago and were originally meant for a bank’s top level executives but somebody thought, “Hey we can take these out on every employee and make a bundle” and they would be correct. There was a big stink made about these policies a few years ago when a woman sued her deceased husband’s employer after she mistakenly received a check for over $1.5 million dollars made out to her husband’s old employer. She later sued the company for the amount of the “dead peasant insurance” minus the premiums they paid which would give her and her two small children over $3.5 million dollars. The startling thing for most of us would not be the policy itself, but the fact that the deceased had been fired from his job over seven years before his death and still the company had the policy and was paid.

Some employers claim that they take this insurance out on their employees to off-set the price of health insurance costs but it has also been found to be an effective tax dodge as there is no taxes paid on the premiums and a death benefit (life insurance) is tax free. So is it fair to say that these companies are reaping the benefits of their employee’s deaths?

A good example of the dead peasant policy is Wal-Mart. Wal-Mart has been sued several times by deceased employee’s spouses or family members after being notified in error of a death benefit pay-out. Two that caught my eye were both long time employees of Wal-Mart, one worked in receiving and the other worked in automotive, upon their passing Wal-Mart received $64,000 dollars for each man’s death while their families received nothing.

Are you a dead peasant policy to your employer? You may never know and if your thinking your employer wouldn’t do something like that, you may want to think again as any number of companies from Wal-Mart, Walt Disney, Hershey Corporation and possibly your local grocery store can have these policies.

Ashby Jones “‘Dead Peasant’ Policy” Wall Street Journal Law Blog

“BOLI Overview” NewYorkLife

Mike Myers “Wal-Mart’s ‘Dead Peasants’ Suit” Contingent Fee Business Litigation

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