If you saw Michael Moore's "Capitalism: A Love Story," you'll probably remember Walmart's dead peasant insurance scheme. The company took life insurance policies out on its workers and collected when they died.
A lot of companies do it. Walt Disney, Procter & Gamble and Hershey Foods (no shock there) are among the many companies believed to have bought dead peasant insurance. They do it to avoid paying taxes (no shock there, either) because the government doesn't tax insurance premiums or death benefits.
McLanahan Myers Espey, a law firm, explains how the term came about:
Winn Dixie Stores bought life insurance policies on approximately 36,000 of its employees, without their knowledge or consent, and named itself as the policies’ beneficiary. The insurance brokerage firm that placed the policies prepared two memos describing the deceased employees as “Dead Peasants.” These memos were part of the court’s record in a lawsuit in which the United States Court of Appeals for the Eleventh Circuit held that Winn-Dixie’s policies were a sham transaction for federal income tax purposes. The memos were later used by reporters.Turns out Gov.
...the Perry administration wanted to help Wall Street investors gamble on how long retired Texas teachers would live. Perry was promising the state big money in exchange for helping Swiss banking giant UBS set up a business of teacher death speculation.
All they had to do was convince retirees to let UBS buy life insurance policies on them. When the retirees died, those policies would pay out benefits to Wall Street speculators, and the state, supposedly, would get paid for arranging the bets. The families of the deceased former teachers would get nothing.It's actually a teensy bit more complicated than that even. AMERICAblog explains how it would have worked:
...(Perry) tried to create what sounds like derivatives — insurance-policy-backed bets — on the deaths of elderly Texas teachers.
Shares in those bets would then be sold to the giant European bank UBS, who would market them as investments. Perry and Texas would get a kind of "finder's fee" or creator's fee. UBS would get commissions on the sale. UBS hack Phil Gramm (of Gramm-Leach-Bliley) would get a fee for coming up with the scheme in the first place and pulling it off for his client.
And the investors would see cash if and when these elderly teachers triggering insurance payouts by joining the "choir invisible." To sweeten (hasten) the deal, Perry simultaneously proposed reducing health insurance coverage for these teachers. It came apart when the teachers refused to sign up.Can't imagine why the teachers wouldn't go for it.