It’s an old observation but still apropos; truth in advertising would dictate we call it death insurance, not life insurance. You’re insuring against the unexpected and unwarranted onset of death. Maybe an annuity could really be called life insurance, since it’s attempting to ensure against living too long—or rather outliving one’s financial resources.
Whatever you call it, it’s rarely pleasant. It’s about someone’s demise, something most people don’t like to contemplate. Doubly so when someone else is profiting from it—as in stranger-owned life insurance, life settlements and, increasingly, company-owned life insurance.
Company-owned life insurance is a common practice and widely-known among advisors, but largely kept quiet by interested parties, that is until recently. A high-profile story in The New York Times in the last year brought it to the attention of the public at large. Condemnation from certain circles was immediate and swift: it’s immoral for companies to profit from the death of employees, critics said, while employees themselves do not directly benefit.
“Companies are holding this humongous amount of coverage on the lives of human beings,” Michael D. Myers, a lawyer in Houston who has brought class-action lawsuits against several companies with such policies, told said in the the Times article.