Legal, But Immoral? Companies Taking Out Life Insurance Policies On Employees

Hundreds of companies in the U.S., including some of the largest banks, are taking out life insurance policies on their employees, with the company as the beneficiary. Employees may be upset by the practice, with some critics saying it is immoral, but the practice is growing. A 2006 law restricts policies to only the highest-paid 35 percent of employees, and only with their permission. Analysts estimate that as much as 20 percent of all new life insurance consists of policies companies take out on employees, and that the total value of policies in place now is in the hundreds of billions of dollars.