Profiting from death? Lawsuit filed in Wal-Mart life insurance case

Houston Chronicle ^ | April 15, 2002 | L.M. SIXEL

[ValerieUSA]

Teenagers who work in fast food places with signs telling would-be robbers that no one is armed inside - these kids are at unreasonable risk - are they insured by the businesses?

This insurance SCAM operation is shocking to me.

[BuckeyeOhio]

After 35+ years in the insurance business, I find this very hard to believe. Even if a company ownes and pays for the premium, the insured MUST sign the application. Even on group life insurance, the insured MUST sign an enrollment form of some type and they indicate a beneficiary.

One of the rules in life insurance is the owner must have an insurable interest - just because a person is an employee, doesn't make them an insurable interest. The company has to PROVE they would be financially harmed by the death of an employee. Walmart would not be harmed by the death of a minimum pay employee.

[aardvark1]

Scam?! This is a non-story. Wake me up when it's over.

[Buffalo Bob]

So, exactly what is wrong with Wal-Mart (or any company) using its money to take a life insurance policy out on an employee and collecting if that employee dies.

[AppyPappy]

I didn't think you could take a life insurance policy on someone without their consent. Maybe it's a state-to-state thing.

[AppyPappy]

There is nothing wrong with it as long as they don't profit from actions that could lead to collection. If a massacre happened in a Walmart because no armed people were allowed in the store, I would suspect Walmart would be in trouble.

[ValerieUSA]

Read the story before you ask the question.
It's NOT using its money - its borrowing the money to buy the insurance and writing off the purchase as an operating expense.
A company whose employees are at high risk for robbery and murder on the job (convenience stores) and takes out BIG policies on these low-paid employees, then fails to provide adequate safety and security precautions while disallowing them their right to bear arms for self-protection on the job, and collects an untaxable life insurance claim when employees are killed - all without the knowledge of the employee or families - is operating a tax and insurance scam.

[toddst]

So, exactly what is wrong with Wal-Mart (or any company) using its money to take a life insurance policy out on an employee and collecting if that employee dies.

Seems a case can be made for this practice, in terms of the costs involved to hire and train a replacement employee, if nothing else. And why is this the domain of government? More legislative interference that's totally unjustified IMHO.

[aardvark1]

Y-A-A-W-W-N

[WaterDragon]

Third-party policies are very common. Someone could take out a policy on your life, and you'd never know it. Unless there is reason to believe the one who holds the policy cause the death of the person insured, then I don't understand the complaint. This kind of policy has been in practice since insurance was first conceived. Maybe unsavory, but not illegal. Don't be too quick to jump on businesses trying to survive. This country is over-regulated as it is.

With all the laws on the books protecting workers, it's unlikely a company will negligently cause the death or be careless of a worker's life just to cash in on a policy.

ValerieUSA, the example you cite is one I think really does need checking out by authorities. That DOES sound as though the company is deliberately negligent of the workers' lives, knowing they'll cash in on a policy.

If people want to cash in on insurance policies if their loved one dies, then they should take out those policies in the first place. They have no legal right to insurance payout on policies someone else took out.

[BuckeyeOhio]

And I say again, you must have and insurable interest to get a policy. In other words, you can't take out a policy on a complete stranger so you receive money when they die. I don't believe this is something that is subject to state to state regulations but is a national thing.

My best guess is Walmart had an insurance policy on a department head which the person signed for, this was not something that was done secretly.

[ValerieUSA]

We know - you are bored. Go away and don't come back.

[ValerieUSA]

Read the article.

[MeekOneGOP]

Scam?! This is a non-story. Wake me up when it's over.

If the employees were stealing money, that's dishonest and breaking the law and they rightly should
be punished. If corporate American breaks Texas laws, why would Texans want to "look the other way?"....

[MeekOneGOP]

So, exactly what is wrong with Wal-Mart (or any company) using its money to take a
life insurance policy out on an employee and collecting if that employee dies.

If if's against Texas laws, there's your answer, FRiend!

[RedBloodedAmerican]

If anyone thinks Walmart comes across thier wealth honestly...they need their head examined. Those people rub shoulders with men who know how to swindle and lie to beat the system.

[teeman8r]

the problem bb is that they write it off the fed taxes so the tax payers are picking up the tab and not reaping the bennies

[MeekOneGOP]

Good article! Thanks for posting this.
You just need a little insect repellent for the flies! :O)

[ValerieUSA]

Every state has an insurance commissioner. Why?
I was happy to learn that Texas objects to this type of scam, but insurance companies apparently have been successful lobbying in most states to allow this kind of transaction.
When families collect on a life insurance policy, the benefit is non-taxable. I think that is great. But for corporations to make non-taxable profits on the deathof minimum wage employees? uh-unh. Do they think they OWN these people?

[Mamzelle]

Why should the heirs get the payoff? They didn't pay the premiums. I don't see the scam, here, just lawyers looking for some money. Good thing they don't insure lawyers, we'd have too many reasons to kill them with the reasons we already have!!

Actually, the loss of any employee causes some expense. What I don't quite get is why WM would want to pay these premiums.