Answer

Is Corporate-Owned Life Insurance Ethical

1. In my perspective, it is unethical for the employees to take benefit of the employee while the family members of the deceased do not get anything. In my view the policy is unethical for a number of reasons. First, there is no much accountability on the death benefits received from the insurance company on the side of the company. Although some companies use them for employee benefits, there is no proof to this while others do not disclose how they use such benefits. As such, the motive of the policy is sinister and the company only takes advantage of the death of the employee to benefit itself. Secondly, buying a life insurance on an employee without their consent implies another lack of accountability and portrays an ill motive behind the program. Thirdly, if the company benefits more from the death of an employee than from his being alive, then the program can be deemed unethical, unfair, and against the wellbeing of people. For instance, companes with such programs would be tempted to scrap some safety protocols or be reluctant to invest in employee wellness programs. If there was a serious accident in a company that has the COLI program and many of its employees lost their lives, then it follows that the company would make huge benefits while the families if the deceased suffer loss. This is unacceptable and morally wrong. If the companies that had the COLI policy had good intentions, then they would consider sharing a percentage of the benefits with the families as a show of solidarity. However, for instance, in the case of Tillman, companies do not consider the families of their employees. As such, I belief that these policies are unethical and unfair.
2. Suppose companies provide a life insurance to each of their employees and then exercise a COLI policy, then that can be considered fair. This is because the company in this case does not take advantage of the death of the employee to benefit alone while the family members have nothing. It is fairer that the employee’s life insurance benefits the family members that are left behind by the deceased employee while the company benefits through the COLI policy as a way of mitigating the gap that is left by the dead employee. Furthermore, it would be a good indication of the clear motive behind the COLI policy as opposed to the case where the program is done without the knowledge or benefit of the employees.
3. By and large, the fact that from a financial perspective some of the employees are worth more when dead than alive presents a genuine conflict of interest. As noted before, if the death of the employee is worth more than their presence, then it follows that the company that invests in COLI would be seen to champion its employee’s death. Moreover, it would be likely that the company would not be fully committed in investing in employee wellness programs. It would also present a conflict of interest in terms of how the money that is gained through COLI is utilized. If the money is utilized to benefit the company alone say in profit making initiatives, the company management would be making business out of death of their employees as opposed to a case where the money is used to promote employee welfare. There is also a form of conflict of interest between the company and the family that does not benefit at all from the program where the death of one of their own is used to benefit the company or employees. This creates a conflict between the family, the company, and the society at large where most people feel that it is the family that should benefit more than the company.