Wal-Mart offers free life insurance to its employees!

We’re amazed that Burbank’s Wal-Mart supporters haven’t been pushing this angle. It’s an old story, sure, but there’s really nothing as good as one, is there?

And just who needs those damned unions anyway– Costco, eat your heart out:

A lawsuit has been filed and is seeking class action status against the retail chain for allegedly taking out secret life insurance policies on its employees and cashing them in when employees pass away. The lawsuit was filed in US District Court and claims Wal-Mart took out 350,000 insurance policies on employees nationwide and have collected on nearly 100 policies involving Florida employees who have died.

The lawsuit is seeking class action status on behalf of the estates of all the Florida employees who died while unwittingly insured by Wal-Mart. According to the lawsuit, the policies were for $50,000 – $80,000 and were taken out on any employee aged 18-70 who participated in Wal-Mart’s health plan. Wal-Mart stopped taking out the policies in 1995, but continued collecting the money on employees and ex-employees who passed away. Wal-Mart canceled the policies altogether in 2000…

This isn’t the first time Wal-Mart has been accused of this practice. The giant retailer was sued in 2001 and settled cases in Texas and Oklahoma for the very same accusations. Two class actions were settled in favor of the plaintiffs: $10.3 million in Texas and $5 million in Oklahoma.

Again in Florida, Wal-Mart bought the life insurance policies and designated itself as the beneficiary. “If you ask Wal-Mart, they say the entire plan was to reduce their tax liability,” says Myers. “The legality of this ‘business practice’ is governed by state law and illegal almost everywhere. The issue is whether the deceased estates have a claim to the policy benefits. Once they learn about the policy, you still may not have a claim but in certain states, once relatives learn about the policies, they do have a claim.

Depending upon where you reside, the families of the deceased employee have a right to recover the employee benefits, but it doesn’t apply in every state. You may want to check with a lawyer.

Oh but wait a minute, there’s a little more to the allegation. It turns out that those valued Wal-Mart partners were indeed valued — so why are people always complaining? There was something for everyone:

In 1993, Wal-Mart adopted a corporate owned life insurance (“COLI”) program through which the company would purchase life insurance policies for its employees. Wal-Mart funded the policies, at no cost to the employees. The policies provided benefits of $5,000 to $10,000 to the decedents’ beneficiaries, with the remainder of the policy amount paid to Wal-Mart. By 2000, as the result of new regulations, Wal-Mart had discontinued the COLI program.

Rita Atkinson and Karen Armatrout worked as a rank-and-file Wal-Mart employees paid hourly wages. Neither opted out of the COLI program and Wal-Mart obtained life insurance policies upon both. Atkinson died in 1996. After payment under her policy to her estate, Wal-Mart received the remainder of the benefits totaling $66,048.70. Armatrout died in 1997 and Wal-Mart received $72,820.30 in benefits under her policy.

Well after all, it was Wal-Mart that paid the premiums, right? And aren’t they the boss? So line up everybody!

Plaintiffs, btw, have had varying success in remedying their claims against Wal-Mart. Floridians seem to be the most out of luck (natch).

But really though, why don’t you get with the future, Burbank critics? All of this whining and hatred towards Wal-Mart is just so goofy and counterproductive. We need jobs!

4 Comments

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4 responses to “Wal-Mart offers free life insurance to its employees!

  1. Anonymous

    I really don’t think it would be so bad if Walmart would give the surviving family half of the amount of the policy.

    • Danny

      Seriously? When it is in an employers power to make a person’s life hellish, so stressful that they have nightmares and/or health damaging stress, you think it is ok for said employer to take out life insurance on their employee? It is ok for someone to financially benefit from willful and intentional infliction of pain and death? And please do not say that the WalMart corporation owners are somehow different from everyone else and would never do such a dastardly deed out of greed.

  2. Anonymous

    If you take out a policy on a family memeber (ie: your parents) who gets the money….all of the family? No, usually, it goes to whomever took out the policy.

  3. Sounds like she didn’t read the fine print. Anyway, don’t bother going up against the biggest company in America – they have the best lawyers money can buy.

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