Bank execs paid via insurance on workers

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http://money.cnn.com/2009/05/20/news/companies/life_insurance/index.htm?section=money_latest


Bank execs paid via insurance on workers
Tax-free benefits reportedly used to pay bonuses, deferred pay and pensions.

By Catherine Clifford, CNNMoney.com staff writer
Last Updated: May 20, 2009: 11:53 AM ET


NEW YORK (CNNMoney.com) -- Banks are using tax-free benefits from life insurance policies they hold for their employees to pay executive bonuses, deferred pay and pensions, according to a published report Wednesday.

Major financial institutions -- including Bank of America (BAC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), Wachovia and its parent, Wells Fargo (WFC, Fortune 500) -- are taking increasing amounts of life insurance policies against their employees, and naming the company as the beneficiary, the Wall Street Journal reported.

The company receives a tax-free benefit when the employee dies, whether that employee is still working at the company or not, the report said.

While banks are not alone in the practice, the amount of life insurance that banks in particular are taking out for their employees has been on the rise, the paper reported.

Bank of America and Wells Fargo confirmed to CNN that they have this type of insurance in place.

"It is a legitimate business practice used by many companies," said Bank of America in a written statement. "Like many companies Bank of America uses this insurance to help defray the cost of employee benefits."

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