I think it’s pretty slimy when a huge company takes out a policy on someone to cash in on them if they kick it, especially without letting them know. If you read the article, you can see how Wal Mart engaged in a huge tax dodge and legal skullduggery to get around the laws that prevent this in Texas. Which brings me to the gist of it. Why is “dead peasant” insurance legal? It sounds really fucking morbid here, by insuring entry-level workers so that they can get a little more cash when a greeter or bagger dies. Nice one Wal Mart.
The above is from a thread from awhile back.
:rolleyes:
The best part about is the relatives claiming that since Walmart doesn’t have “insurable interest” in the deceased, that the death benefit should go to the…wait for it… relatives. Surprise!
Not quite the same thing, that.
It seems weird, but I do not see what is immoral about it or why the money should go to the family.
Well, what would you think if SDMB took out a life insurance policy on you, payable to them? I mean, you are a content provider.
I don’t see how Wal-Mart can claim to have an insurable interest in someone while, at the same time, paying them five bucks an hour.
Whether the money ought to go to the estate or family is another matter. But Wal-Mart has no basis for these policies.
Quick history lesson:
When life insurance was first marketed (originally called “death insurance”, same as “fire insurance” - it didn’t sell very well, for some reason), people would insure the town drunk/vagrant and, shortly thereafter, said drunk/vagrant would die under less than foreseeable circumstances.
That is where the rule of “insurable interest” came from - you don’t get to benefit from the death of someone unconnected to you.
(you also can’t take out fire insurance on the vacant building you don’t own, same idea)
While I’m sure Wal-Mart didn’t plan to arrange untimely deaths of their employees, this bit of financial planning is exceedingly sleazy.
In general, companies take out life insurance on their employees since if they die it will cost the company money to recruit and train a new employee. It’s a recognized and fairly common practice in business. I don’t know to what extent the theory really applies in the case of a shelf-stacker, mind you.
pan
True, but I’ll eat my hat if the relatives (mostly spouses, really) in this suit have no stake whatsoever in the estate. It’s obvious that this is really what they want.
If I was Wal Mart, I would suggest that the policies be made null and void rather than let the money go to the families, but I’m vindictive that way.
Insurance is basically betting, I can’t see that Wallmart would make cash out of this, because the odds are always with the house. The insurance companies will have “done the math”. Generally Wallmart will pay out more on someone than they receive when that person dies. Otherwise the insurance companies wouldn’t offer the policy. I am suprised that Wallmart are doing this, because it seems like bad buisness, unless they know something that the insurance companies don’t know. If Wallmart are slipping benzene into the water to re-coup their insurance, then that’s pit worthy, otherwise its just a bit macabre.
Whether Wal-Mart benefits depends on the tax status of the insurance payout. If it’s taxable as income, then Wal-Mart makes no net gain. If it’s tax-free, and I suspect that’s the case, then they’ve paid a tax-deductible premium and get back a tax-free payout. I would bet that the premium is slightly higher than the payout, so that the insurance company gets its cut, and Wal-Mart avoids paying tax on the amount of the premium.
I mean, in my opinion, it’s not a matter of scamming the employees but scamming the tax system.
So what? You think they should bring suit just for the sake of abstract justice? Of course the person who would benefit from undoing the wrong is the one who’s going to sue to have it undone. Should I go sue the phone company because they stuck Airman Doors with a $422 bill?
Desmostylus
How does that work ? doesn’t a tax deductable premium just mean that they don’t pay any tax on the premium, then they get a tax free payout. But if the payout is higher than the sum of the premiums then the insurance companies must be paying the difference.
Sorry I realise that this is not GQ, so let me add that you are all a bunch of wazzocks.
Wal-Mart works out that, say, one in 10,000 employees dies each year. Conveniently, let’s say they have 100,000 employees.
They pay a premium of $1 per employee. Total $10,000. The payout is $950 per death. Total expected payout per year is $9500.
So Wal-Mart expects to lose $500 to the insurance company.
Wal-Mart doesn’t have to pay tax on the premium, because it wasn’t retained as earnings, it was paid out as an expense.
Now, if Wal-Mart’s tax rate is, say, 20%, they don’t have to pay $2000 tax on the $10,000 premium.
Wal-Mart comes out $1500 in front.
Of course it’s not GQ. Asshole.
I completely stuffed that up didn’t I.
Try again.
Wal-Mart works out that, say, one in 10,000 employees dies each year. Conveniently, let’s say they have 100,000 employees.
They pay a premium of $1 per employee. Total $100,000. The payout is $9,500 per death. Total expected payout per year is $95,000.
So Wal-Mart expects to lose $5,000 to the insurance company.
Wal-Mart doesn’t have to pay tax on the premium, because it wasn’t retained as earnings, it was paid out as an expense.
Now, if Wal-Mart’s tax rate is, say, 20%, they don’t have to pay $20,000 tax on the $100,000 premium.
Wal-Mart comes out $15,000 in front.
Sigh.
I should also add, in case it’s not obvious, that the insurance company would be in on scam, and set the payout to ensure that the insurance company and Wal-Mart both come out happy.
Who is the wronged party here? The family hasn’t been hurt, Wal Mart hasn’t taken a single solitary penny from them. The only reason they’re suing is because WM is getting $$$ from the death and they’re not. They need to rectify this hideously unfair situation by making sure the money goes to them instead.
IMHO, the families are no less greedy than Wal Mart.
IMHO, the families aren’t acting in a morally wrong fashion. They’ve been approached by a lawyer who says “you’ve got a chance to get, maybe $32,00 out of that $64,000 [sotto vocce] (and I’ll keep the rest) [/sotto vocce]. What do you say? You’ve got nothing to lose!”. To the families, it’s just a chance for a free ticket in the legal lottery.