Thinking outside the coffin
(April 25, 2002 12:46 a.m. EDT) - Lately, has your company: Said it was sending you to New York's Garment District to introduce its new line of Taliban sportswear?
Asked you to make some minor repairs on the flagpole - during a thunderstorm?
Announced that you would be heading up a new accounts-receivable office in Baghdad to made "that deadbeat" Saddam Hussein pay up?
Circulated a newsletter that said new studies showed that smoking and obesity were good for you, seat belts were bad and a few quick pops actually improved your reflexes at the wheel?
If so, there's a good reason. You might actually be worth more to your employer dead than alive and on the job.
Thanks to the sniper-eyed trend watchers at The Wall Street Journal, we now know of something blandly called COLI, corporate-owned life insurance - or, more graphically, "janitors insurance," or, most accurately, "dead-peasants insurance."
The practice seems to be widespread, though not widely publicized. It's easy to see why.
For years, companies have insured themselves against the loss of top executives. Thanks to changes in many state laws in the 1980s, companies began to insure everyday employees, the rank and file, the janitors, and - here's the good part - they never told the peasants about it! Indeed, says the Journal, in most companies the existence of the insurance is a closely guarded secret. One company laundered its gains through the executive compensation account so the bookkeepers in accounting wouldn't find out and go blabbing to the other peasants.
The gains in the company's whole-life policies on its workers were tax-free; the company could borrow against the cash value of the policies; and when the worker died, the company - not the worker's survivors - got the tax-free death benefits.
Talk about thinking outside the box; this is thinking outside the coffin.
Since the practice is largely secret, its language tends to be refreshingly free from the usual corporate euphemisms. The Journal says that the printouts that list all the workers covered and for how much are called "death runs."
The company would keep paying the premiums, even after a worker quit or was fired or retired. Just so a long-departed worker doesn't slip into the hereafter unnoticed, company emissaries, no doubt out of compassion and concern, regularly troll through Social Security's databases to see who might have died. A worker may die penniless, but somewhere somebody is cashing in on his death.
In Georgia, companies can legally carry dead-peasant insurance on their worker's spouse and children. This is too ghoulish for words because the company's bottom line benefits handsomely if the whole family gets wiped out in a car accident.
COLI - if it's done online, does that make it E. coli, the bacteria that causes fatal food poisoning? - is not some small-time deal. The Journal says some of America's largest and best-known corporations carry the policies and says the Internal Revenue Service is suing 85 of them for $6 billion or more in what the IRS says is illegal deductions for the policies.
Some companies are not totally secretive about the policies. They offer the workers $5,000 to $10,000 in additional life insurance coverage in exchange for letting the company insure them, not bothering to tell the worker the company stands to collect several hundred thousand dollars when the worker stumbles off into that good night.
A bill in Congress would require a company to tell its workers if it has made a bet on their life spans and for how much and with whom. Those little disclosures will certainly brighten employee morale.
According to the Journal, the laws that the insurance industry persuaded the states to change so they could sell COLI were intended to lessen the incentives to profit from someone's death, say by hurrying it along.
Give dead-peasants insurance its due as a public-relations strategy. It has made the executives who took Enron over the cliff look warm and cuddly.
nandotimes.com |
