Bank execs paid via insurance on workers

[G_j]

http://money.cnn.com/2009/05/20/news/companies/life_insurance/index.htm?section=money_latest


Bank execs paid via insurance on workers
Tax-free benefits reportedly used to pay bonuses, deferred pay and pensions.

By Catherine Clifford, CNNMoney.com staff writer
Last Updated: May 20, 2009: 11:53 AM ET


NEW YORK (CNNMoney.com) -- Banks are using tax-free benefits from life insurance policies they hold for their employees to pay executive bonuses, deferred pay and pensions, according to a published report Wednesday.

Major financial institutions -- including Bank of America (BAC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), Wachovia and its parent, Wells Fargo (WFC, Fortune 500) -- are taking increasing amounts of life insurance policies against their employees, and naming the company as the beneficiary, the Wall Street Journal reported.

The company receives a tax-free benefit when the employee dies, whether that employee is still working at the company or not, the report said.

While banks are not alone in the practice, the amount of life insurance that banks in particular are taking out for their employees has been on the rise, the paper reported.

Bank of America and Wells Fargo confirmed to CNN that they have this type of insurance in place.

"It is a legitimate business practice used by many companies," said Bank of America in a written statement. "Like many companies Bank of America uses this insurance to help defray the cost of employee benefits."

..more..

[Captain Hilts]

1. The WSJ had an article about this also. nt

[onethatcares]

2. walmart was doing the same thing years ago.

i forget the outcome of the lawsuits about it. I do believe it wasn't looked upon as a legitimate business practice.

[dixiegrrrrl]

3. Blood sucking vampires ain't got nothing on the Corpocracy.

What happens to Joe Blow when he moves from one job to another?
Each company pays into the death betting pool?

Wonder if employee "accidental" deaths have increased?

[Sal Minella]

7. If B of A was paying the premiums on Mr. Blow, it wouldn't matter at all if he

changed employers or retired -- the insurance policy attaches to the person and has nothing to do with where he works or whether he works, as I understand it -- Mr. Blow's death precipitates a cash drop from the insurance company into B of A's coffers.

Presumably Joe Blow's new employer could also take out a policy on him, so if he worked for several companies, he could be of wonderful benefit to them all.

And he would never even know about it, and his widow wouldn't be paid a dime.

[Captain Hilts]

4. kick

[Sal Minella]

5. A few years ago, this practice was called "Janitor's insurance."

It was a tax dodge then and it's a tax dodge now, and you just have to admire the B of A folks for saying it's a "legitimate business practice."

For them, any tax dodge is considered "legitimate," I'm sure.

The "employee benefits" are going to the already-overpaid management suits -- the janitors receive no benefit at all.

[tom_paine]

6. It was also called "Dead Peasants Insurance"

And rarely has a better descriptor of our Neo-Feudal Inervted Totalitarianism been invented.

[Captain Hilts]

9. From Gogol's 'Dead Souls'?

[sarcasmo]

8. There is no limit to Corporate Greed. Kick and Nom, just SICK!

[stevedeshazer]

10. This is disgusting.

It doesn't take a whole lot of imagination to think of the next step: Offing canned managers for cash.

[Mnemosyne]

11. Employees end up more 'valuable' dead than alive. Despicable. n/t

[AllentownJake]

12. Well the big Life Insurance Companies just got a bailout as well

Hartford, Lincoln National etc...they all bought small banks and declared themselves bank holding companies than proceeded to dig into the trough. If the Life Insurance companies were properly doing their actuarial work this should not turn a profit. The goal of a Life Insurance Company is to take more in Premiums than you do in paying benefits.

Gotta love Geithner.

[Wednesdays]

13. K&R

:kick: