Dead Peasant Policies

Life insurance policies which pay out to an employer in the event of an employee’s death.

Michael Moore’s latest film, “Capitalism: A Love Story,” has reinvigorated discussion of “dead peasant policies,” as Jonathan Kim explained on The Huffington Post:

One of the more explosive revelations in “Capitalism” is “dead peasant” insurance policies (also known as “janitors” policies). This is when a company buys a life insurance policy on a rank-and-file, low-level employee – usually without the employee’s knowledge – and claims the company as the beneficiary should the employee die. The company retains the policy even after the employee leaves, and if the employee dies, the company receives a large, tax-free payout, which they then refuse to share with the family of the deceased.

Dead peasant policies were spotlighted in February 2009, when the widow of a Texas bank worker sued her husband’s former employer after it received a $1.6 million life-insurance payout following his death.

(In May 2009, Ellen E. Shultz reported in The Wall Street Journal that many banks use payouts from employee life insurance policies to help pay bonuses to current employees.)