Introduction: Life Insurance or Death Dividend?
Life insurance was created to protect families against financial ruin when tragedy strikes. But in the hands of corporations, this safety net was twisted into something darker.
Throughout the 1980s and 1990s, companies quietly insured the lives of their workers without telling them — collecting millions when employees died. Families received nothing. Critics dubbed this practice “Dead Peasant Insurance,” and for good reason: it reduced human lives to profit margins.
What follows is the story of how corporations turned workers into financial assets, how laws eventually caught up, and why the issue still matters today.
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What Is Dead Peasant Insurance?
“Dead Peasant Insurance” is a slang term for Corporate-Owned Life Insurance (COLI).
- Who’s insured? Ordinary employees — not just executives.
- Who pays premiums? The corporation.
- Who benefits? The corporation, not the family.
The rationale given was “risk management,” but in practice, these policies became corporate investments. The death of a worker meant a tax-free payout that could be worth tens or even hundreds of thousands of dollars per employee.
📖 Resource: Hastings Law Journal, Peasants’ Revolt: Why Congress Should Eliminate COLI (2014) link
Historical Origins of COLI
Life insurance has existed since the 18th century, with companies like the Equitable Life Assurance Society (founded in 1762) pioneering actuarial science. By the 20th century, businesses discovered they could use life insurance not just for families, but for corporate protection.
- Key Person Insurance: Initially designed for founders and executives.
- Expansion in the 1980s–1990s: Corporations began covering entire workforces.
- Tax Sheltering: COLI became a popular way to exploit tax loopholes.
By the mid-1990s, it was estimated that corporations held over $100 billion in COLI policies nationwide.
📖 Resource: New York Times, “Corporations Profiting on Workers’ Deaths” (2002).
Real Cases That Exposed the Truth
Wal-Mart and the “Dead Peasants” Outrage
Wal-Mart secretly insured hundreds of thousands of workers in the 1990s. Some policies remained in force even after employees left the company.
- When a worker died, Wal-Mart collected death benefits.
- Families often didn’t know these policies existed until lawsuits revealed them.
- Public anger was so strong that “dead peasant insurance” became a household phrase.
📖 Resource: Wall Street Journal, Schultz & Francis, Companies Profit on Workers’ Deaths Through ‘Dead Peasants’ Insurance (2002).
The Tillman Case (Camelot Music)
Felipe Tillman, a young employee at Camelot Music, died suddenly. His family later discovered the company had collected money from a COLI policy on his life.
- Lawsuits challenged whether Camelot had an “insurable interest.”
- The case became a landmark example in exposing COLI abuses.
📖 Resource: Hastings Law Journal case analysis.
Journalists at Freedom Communications
In 2014, Freedom Communications, a newspaper publisher in California, proposed insuring its journalists and other employees — not for families, but for the company’s pension scheme.
- Journalists called it a betrayal.
- The Guardian reported extensively on the backlash, reigniting debate about COLI ethics.
📖 Resource: The Guardian, “US Newspapers Fall Out Over ‘Dead Peasant’ Insurance” (2014).
Other Major Corporations
- Banks and Retail Chains: By the 1990s, many large firms used COLI to manage balance sheets.
- Energy Companies: Some utilities used COLI payouts to stabilize pension funds.
- Estimates: By 1996, more than 35 of the largest U.S. corporations had COLI programs in place.
📖 Resource: Seattle Post-Intelligencer, “Firms Can No Longer Take Out Dead Peasant Insurance on Workers” (2005).
Why Companies Did It
- Profit: Tax-free death benefits padded earnings.
- Tax Loopholes: Premiums were often deductible, making COLI a tax shelter.
- Accounting Trick: Policies could inflate balance sheets and stabilize pension plans.
- Disguised Justification: Companies claimed it was “risk management,” but lawsuits showed it was about financial gain.
📖 Resource: Tax Policy Center, Corporate-Owned Life Insurance: Issues and Implications.
Legal and Ethical Fallout
The “Insurable Interest” Problem
Insurance law requires a beneficiary to have an insurable interest in the insured person’s life. For executives, this makes sense. For ordinary employees, the claim was tenuous at best. Courts began striking down policies that lacked genuine insurable interest.
Lack of Consent
Many employees were never told. Outrage led to new laws requiring written employee consent before companies could insure workers.
Tax Reforms
The Pension Protection Act of 2006 tightened loopholes, limiting tax advantages and requiring notice and consent.
Public Trust
Scandals permanently damaged the reputation of corporations caught using COLI on ordinary employees. Wal-Mart, Camelot, and others became poster children for corporate greed.
Ethical Debate: Are Lives Assets?
Dead peasant insurance raises the ultimate moral question: should companies profit when their employees die?
- Proponents: Say it provides financial stability for pensions or business continuity.
- Critics: Argue it dehumanizes workers, reducing them to profit streams.
As author Ellen Schultz put it in the Wall Street Journal, “When death becomes a revenue source, it tells you who really benefits in corporate America.”
Where Things Stand Today
While widespread COLI practices on rank-and-file workers have declined due to legal reforms, variations still exist:
- Executive COLI: Still common for top leaders.
- Pension-Linked COLI: Used to fund retirement liabilities.
- STOLI (Stranger-Originated Life Insurance): Investors profit from strangers’ policies.
The loopholes may have narrowed, but the mentality persists: when profit is prioritized over dignity, human lives remain at risk of exploitation.
Why This Story Matters Now
Dead peasant insurance isn’t just a historical scandal. It’s a reminder of what happens when corporations prioritize shareholder value over human value.
Today, as companies experiment with new financial products and exploit gray areas in law, the lesson is clear: vigilance matters. Workers deserve transparency and respect — in life, and in death.
References & Resources
- Wall Street Journal: Companies Profit on Workers’ Deaths Through ‘Dead Peasants’ Insurance
- Hastings Law Journal: Peasants’ Revolt: Why Congress Should Eliminate COLI
- Seattle Post-Intelligencer: Firms Can No Longer Take Out Dead Peasant Insurance on Workers
- The Guardian: US Newspapers Fall Out Over ‘Dead Peasant’ Insurance
- Tax Policy Center: Corporate-Owned Life Insurance: Issues and Implications
- Pension Protection Act of 2006 (U.S. Federal Law)
Disclaimer
This article is for educational and informational purposes only. It does not provide legal, financial, or insurance advice. For personal concerns about insurance or corporate practices, seek advice from a qualified attorney or licensed insurance professional.
About the Author
I’m A.L. Childers, an author and researcher dedicated to exposing hidden truths about money, power, and history. My work shines a light on how corporations and governments manipulate systems — and how ordinary people can see through the lies.
