Dead peasants insurance, also known as corporate-owned life insurance (COLI), involves companies taking out life insurance policies on their employees, typically without the employees' knowledge or consent.
The term "dead peasants insurance" originated as a pejorative reference to the novel "Dead Souls" by Nikolai Gogol, where the protagonist buys deceased serfs to profit from their value.
The practice became controversial in the 1990s when companies increasingly purchased these policies on low-level employees indiscriminately, raising ethical and legal concerns.
The primary purpose of dead peasants insurance is to provide financial protection for the employer against the loss of productivity and other costs associated with an employee's death.
In many cases, the death benefit from these insurance policies is payable directly to the employer, allowing companies to collect significant sums when an employee passes away.
The US federal law requires that companies notify employees if they are covered under such policies, but compliance and enforcement can vary significantly by jurisdiction.
Some corporations have justified the practice by claiming it helps cover costs related to employee turnover and the hiring of replacements, although critics argue that it exploits vulnerable workers.
Employers usually purchase these policies on employees who are considered low-risk or whose deaths would not significantly impact the company’s operations, often leading to ethical concerns about valuing lives.
The policies can lead to a conflict of interest, where companies may not be incentivized to prioritize employee safety and well-being due to potential financial gains from employee deaths.
The market for COLI policies has grown substantially, with estimates suggesting that billions of dollars are generated annually from these insurance schemes, primarily benefiting large corporations.
While dead peasants insurance typically targets lower-level employees, some firms also insure high-ranking executives under different insurance categories, such as key person insurance.
Critics argue that the absence of employee consent in many cases raises serious ethical issues and has led to calls for more stringent regulations governing such insurance practices.
Many companies have faced lawsuits over dead peasants insurance, with some courts ruling that the practice violated principles of good faith and fair dealing in employment.
The insurance policies often include provisions that allow employers to maintain coverage even after an employee leaves the company, prolonging the financial benefit to the employer.
The term "janitor's insurance" is another colloquial name for dead peasants insurance, further emphasizing the nature of the employees targeted by these policies.
The debate around dead peasants insurance has sparked discussions on corporate ethics and the value of human life, particularly in sectors with high employee turnover rates.
Some states have implemented regulations requiring informed consent from employees before they can be insured under company-owned life insurance policies.
The practice is also seen as part of a broader trend of monetizing employee lives, reflecting cultural attitudes towards labor and corporate responsibility.
There are ongoing efforts in some jurisdictions to reform laws related to dead peasants insurance, aiming to protect employees and ensure transparency in corporate practices.
The complexity of corporate-owned life insurance policies can create confusion, with varying laws and regulations across different states potentially impacting how these policies are administered and enforced.