Is abduction insurance bad policy?

For some reason this story makes me very sad:


http://www.dallasnews.com/sharedcont....1c9a2d94.html

[ChunkyAcidReflux]

This reminds me of all the companies that were taking out life insurance policies on their employees. Wal-Mart used to have a policy on all of their employees before they got sued by the family of a dead worker. I think that its a shady business model and I would be uncomfortable working for an employer that had a policy of that kind.

Completely agree.

[zerojunkie]

It's a little disturbing, but the economics of such a thing are talked about in the article. Like it says, the insurance industry isn't designed to be some sort of policy holder investment scheme. I doubt these companies are making money from the demise of it's employee's.

[ChunkyAcidReflux]

Originally Posted by zerojunkie

It's a little disturbing, but the economics of such a thing are talked about in the article. Like it says, the insurance industry isn't designed to be some sort of policy holder investment scheme. I doubt these companies are making money from the demise of it's employee's.

actually they are. Companies get big writeoffs for insurance expenses, so if they pay $200 to insure an emplyee they save $175 in tax season, they are only out $25. If that emloyee croaks they get $250,000

So it only take one dead employee to make the program very profitable for the company.

[zerojunkie]

Originally Posted by ChunkyAcidReflux

actually they are. Companies get big writeoffs for insurance expenses, so if they pay $200 to insure an emplyee they save $175 in tax season, they are only out $25. If that emloyee croaks they get $250,000

So it only take one dead employee to make the program very profitable for the company.

Interesting, that doesn't create a conflict of interest.

[defcon]

Originally Posted by ChunkyAcidReflux

actually they are. Companies get big writeoffs for insurance expenses, so if they pay $200 to insure an emplyee they save $175 in tax season, they are only out $25. If that emloyee croaks they get $250,000

So it only take one dead employee to make the program very profitable for the company.

Do you always reply without knowing what you are talking about?

Even if that type of policy cost 200 (and believe me it costs a ton more for teh K&R insurance in South America) How in hell would you save $175 at tax season on a tax cost of $200? Even if the policy is fully deductible for the company what company would pay an 87.5 % tax bracket? That is the bracket they would be in to save 175 on a 200 expense. In addition to that If hanover buys a policy from AIG to cover the risk do you think AIG is giving the money away? The only way Hanover can make money on these policies is if the insurance company is making payouts. These policies are heavily researches on a statistical basis and then designed to be profitable for the insurance comapny. They do lose money on individaul policies but over the entire group the insurance company makes money and they can only do it by charging premiums inline with their staying profitable.

BEsides the guy took a job in a dangerous area and looks like he was making good money for it. The company needs to protect the bottom line and that is why they get the insurance policy. The wal mart situation does not relate as they took it out on all employees. And they do not have the risk on employees as a company like halliburton or hannover. How much does it cost to replace a greeter as opposed to a chief engineer of an oilfield? The answer is the cost is not even close.

My company has a life policy on me, called key man insurance, because if I die it will cost my company a ton of money to rercruit hire and train my replacement to be even close to me. Not the same as the kidnap policies in South America but my company would still receive a check for my death. But tehy would not make money because of teh loss from me no longer being there.

While his death is regretable the company appear to have done nothing wrong.

Besides if he was concerned about his family he would have purchased additional life insurance.