Wednesday, February 25, 2009

"Dead Peasant" Policies Draw Fire

Ashby Jones writes in a blog on the Wall Street Journal website that "dead peasant" insurance policies are "spawning a good deal of litigation." Jones notes, "The point of 'dead peasant' policies seems to be this: Companies contribute money to the policies, which then can be used to pay for a variety of company expenses. In addition, when employees, retirees and former employees die, the company receives tax-free death benefits." In a Texas case, "the widow of a disabled former employee of Houston-based Amegy Bank NA is suing to recover $1.6 million in life-insurance death benefits the bank received after her husband died last year."

Sounds like another manifestation of corporate greed.

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