May 2, 2002
By Jeff Ritchie
It's an advertising gimmick with a long pedigree: use your
employees to create a "just plain folks" image for your otherwise
soulless corporate behemoth. Insurance conglomerates, telecommunications
giants, and auto manufacturers hope to convince the public
that Amalgamated Industries, Inc. is just like the mom-and-pop
grocery store we knew as kids.
Now consumers are learning that with some companies, the
phrase "our people are our greatest resource" might be more
accurate than they would have us believe. Wal-Mart Corporation,
the epicenter of corporate folksiness, finds itself accused
of taking out life insurance policies on its employees without
their knowledge or consent, then profiting from their deaths.
While it only makes sense for a corporation to insure the
lives of its key personnel or corporate officers, these policies
are being taken out on part-time cashiers and stock boys.
The very people for whom Wal-Mart doesn't provide an affordable
health plan because, according to the company, it can't afford
such benefits and still remain competitive.
In the insurance industry, these are commonly known as "dead
peasant" policies, and some estimate that up to 10 million
American workers are effected.
In the case of Wal-Mart, the company has been quietly insuring
the lives of its sales associates in Texas, amounting to some
350,000 policies in effect. Given the average U.S. mortality
rate, Wal-Mart could be "earning" more than $10 million annually
from the deaths of its Texas employees. Another Texas company
took out accidental death policies on its employees, then
reaped a $250,000 windfall when just one was killed in an
What's more, corporations like Wal-Mart keep these policies
in effect even after an employee leaves the company. So if
you work for several major corporations during the course
of your professional life, you might have accumulated - without
your knowledge or consent - several life insurance policies
that would benefit your former employers.
Corporate hostility toward universal health care suddenly
makes a lot more sense; it's not just that corporations don't
want to pay the premiums for health insurance, it's because
your living a long and healthy life is bad for the bottom
line. Corporate America has a genuine financial interest in
your early demise.
This is not a mom-and-pop grocery store. This is corporate
welfare at its most odious.
And if you thought it couldn't get any worse, it gets even
worse. Until recently, the premiums for these policies were
considered a tax-deductible business expense, the same as
with any other employee benefit. This means that the cost
was partially underwritten with tax dollars collected from
the same employees who were working at lousy wages but never
receiving any of the benefits from these "dead peasant" policies.
Even though the IRS has moved to plug this particular loophole
since 1996, some corporations are already attempting to use
creative accounting practices to circumvent the law. More
than eighty corporations are under federal investigation for
using fraudulent policies, at a cost to the taxpayer in the
billions of dollars.
And there's more. Proceeds from insurance policies are not
considered taxable income to the person (or corporation) who
receives it, which means that after taking a generous tax
break for the cost of the policy, the corporation receives
a tax-free gift after its employees pass away.
But I'm sure all this helps mom and pop through the grieving
Jeff Ritchie is a writer and Democratic Party activist in