I didn't bring it up now .. someone else pinged me to it.
I was curious how the case turned out, and looked it up for a follow-up.
Wal-Mart did violate Texas law by taking out life insurance policies on non-key employees.
As an insurance broker, the issuing company would have reprimanded me (at least) for even writing an application on a non-key employee.
It is the obligation of the writing agent to point out to the policy owner (in this case Wal-Mart) that there must be an insurable interest before a policy will be issued. If the writing agent doesn't catch it, the underwriting department is the next level where those kinds of mistakes are stopped.
I don't write on large companies like Wal-Mart, but it looks to me that Wal-Mart got a raw deal here.
One: It was the life insurance companies responsibility to decline to write and issue the policies, not Wal-Mart’s.
Two: Once written, Wal-Mart was the owner and premium payer, not the employees or the families.
Three: Dollars to donuts Wal-Mart had to pay gift taxes (about a 50% tax rate) on the death benefit that Wal-Mart was wrongfully forced to give to the employees families. A $100,000 death benefit to the family (remember that $100,000 was legally and morally Wal-Mart’s) also cost Wal-Mart an additional $50,000 in taxes.
One winner though, Wal-Mart bashers, like youself and those over at the DUmmie site.
I'll stay on the morally correct side.