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Companies Benefit When Employees Die
{Poster's Comment--Perhaps companies' could take dead employees skin and make it into lampshades.}
http://www.foxnews.com/story/0,2933,109267,00.html
Friday, January 23, 2004
ATLANTA — When Joel St. John died, his wife learned that the grocery store chain where he worked as a butcher was the beneficiary of his life insurance policy, not his family.
The company made off with $100,000 of his money and the family only received $17,500.
The chain, Winn Dixie Grocery Stores (WIN), benefited from an increasingly common practice called company-owned life insurance (search), when a firm takes out life insurance policies on employees and then earns money tax-free when they die.
Currently 25 percent of Fortune 500 companies have such policies, including Disney (DIS), Dow Chemical (DOW) and the parent company of the Fox News Channel, News Corporation (NWS). One firm is even making 12 percent of its bottom line from employee death benefits.
The practice of company-owned life insurance has gained the nickname "janitor insurance" and "dead peasant policy" and caught the attention of some lawmakers and attorneys, who say firms shouldn't be capitalizing on their employees' deaths. Companies like Wal-Mart Stores Inc. (WMT) are now facing lawsuits.
But advocates of the company-owned life insurance policies say politicians and lawyers are vilifying the practice, and the money is often used to fund other employee benefits.
{Poster's Comment--Perhaps companies' could take dead employees skin and make it into lampshades.}
http://www.foxnews.com/story/0,2933,109267,00.html
Friday, January 23, 2004
ATLANTA — When Joel St. John died, his wife learned that the grocery store chain where he worked as a butcher was the beneficiary of his life insurance policy, not his family.
The company made off with $100,000 of his money and the family only received $17,500.
The chain, Winn Dixie Grocery Stores (WIN), benefited from an increasingly common practice called company-owned life insurance (search), when a firm takes out life insurance policies on employees and then earns money tax-free when they die.
Currently 25 percent of Fortune 500 companies have such policies, including Disney (DIS), Dow Chemical (DOW) and the parent company of the Fox News Channel, News Corporation (NWS). One firm is even making 12 percent of its bottom line from employee death benefits.
The practice of company-owned life insurance has gained the nickname "janitor insurance" and "dead peasant policy" and caught the attention of some lawmakers and attorneys, who say firms shouldn't be capitalizing on their employees' deaths. Companies like Wal-Mart Stores Inc. (WMT) are now facing lawsuits.
But advocates of the company-owned life insurance policies say politicians and lawyers are vilifying the practice, and the money is often used to fund other employee benefits.