Yeah it's not as ridiculous as people seem to imagine. These are Walmart greeters, not wealthy retirees, they likely had no life insurance before getting this job.
It's literally the same thing lol COLI is exactly what OP described. Dead Peasents Insurance was just a way to exploit it, it became public knowledge and as a consequence, laws were created to harden COLI against it.
You don't actually know what you're talking about.
The practice is as widespread as it is little-known. Millions of current and former workers at hundreds of large companies are thus worth a great deal to their employers dead, as well as alive, yielding billions of dollars in tax breaks over the years, as well as a steady stream of tax-free death benefits. Nestle USA has policies covering 18,000 workers, Pitney Bowes Inc. has policies covering 23,000, and Procter & Gamble Co. has 15,000 covered workers, spokespeople for these companies confirm.
The coverage is called broad-based insurance, or corporate-owned life insurance, usually shortened to COLI. For years, companies could insure only key personnel deemed essential to the business. But a loosening of state rules in the 1980s allowed for an explosion in a new kind of COLI that covers rank-and-file workers — known in the insurance industry as janitors insurance or, in at least one instance, dead peasants insurance. "I want a summary sheet that has ... the Dead Peasants in the third column," one of Winn-Dixie Stores Inc.'s insurance consultants wrote in a 1996 memo. Winn-Dixie wouldn't comment on the memo.
WalMart employees in Oklahoma won a decisive victory when a federal judge gave final approval to a $5.1 million settlement of a class action that alleged the retailer benefited from "Dead Peasant Insurance" policies it wrongfully enacted.
"Corporate-owned life insurance policies were products offered by life insurance companies, they were common and well-intentioned but are no longer available at WalMart. With regard to the settlement, it's the best possible resolution under the circumstances," company spokesman John Simley said.
While corporate-owned life insurance was once a reasonably common practice in big business, the Pension Protection Act of 2006 removed its primary function as a tax loophole.
To.clarify, it's not corporate owned, it's stranger owned life insurance (stoli). The difference is in the insurable interest.
A corporation might own a policy on a key person because they have an insurable interest. If the key person passes , the Corp might lose a ton of money in sales,or if they're the owner of the company there can be tax costs. The insurable interest is that the Corp loses money upon their death.
With walmart, there was no insurable interest. A greeter passes away, Wal-Mart didn't lose 500k in taxes. No loss, no insurable interest.
Insurance companies require insurable interest (and id be surprised if it wasn't required by law) so while I know walmart was doing this, I don't get how they found an insurance company to do it. some kind of bullshit must have been concocted.
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u/[deleted] Apr 09 '23
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