Question
Anybody heard of this type of ins?? Walmart drivers might be interested especially to know., because Walmart pulls this trick.
It seems that there is a growing trend by large corps. to take out substantial life insurance policies on their employees, you know $250K+ when they die.
Nice eh?....Only snag is, the corp forgets to tell the employee that they did this in the first place, Hallejulah!! The employee dies and the family gets zilch, nada. The company collects and what have you got.?? Bingo!! This is not rocket science folks.
Dirty trick, yes....illegal, NO!! Companies are exploiting this little known rule so they can profit, call it workers comp for compensating the company.
But beware, depending on where you live, these sneaky people will conjure up some seductive name to call it. Throw in a nice big lie and hey presto, you may never find out.
I found this out because I have friends in the business. I suggest you find out for yourself, if you find to the affirmative then you know what to do, don't you.
Answer
The type of policy you're describing is referred to us as a "key man " policy. Not illegal, in fact smart business. When an employee becomes an intricate part of a business, so much so that the death of that individual would result in a financial loss to the employer, then a "key man" policy could be the remedy.
The employer is the beneficiary but the employer pays the premium. Therefore, no benefit to the family as there was no expense to the family.
I have a "key man" policy on myself, but named my husband as the beneficiary. Should I die, as owner and "key" man of the business, there would be a financial hardship. The policy will provide him the funds he will need to maintain payroll, bring in a temporary replacement, pay professional consultants and make arrangements to sell the business.
Any "key man" policy of signifcant size would probably require a physical and consequently the individual would have knowledge of the situation. I've never heard of this before, but have friends driving for Walmart and will investigate and advise.
Answer
A while back I read a nice article in Readers Digest about this. Some companies are not doing it just on "key" employees but on anyone and everyone they hire, particularly those who are somewhat advanced in age, and the policy is not neccesarily very large. Maybe 5,000 or 10,000 dollars.
Answer
Walmart was insuring janitors and other low level employess with this type of policy, once it became public knowledge, they stopped doing it.