Companies fund bonuses with life insurance


Thousands of companies buy life insurance policies to help fund executive compensation and benefits. These policies are held on thousands of employees, not just executives. Banks are among the biggest players with billions of dollars in life insurance on employees, according to a story in today's Wall Street Journal. When they collect on these policies after an employee's death they get the money tax free.

Bank of America (BAC) is the biggest player in this game with $17.3 billion at the end of the first quarter, according to bank filings. J.P. Morgan Chase (JPM) had $11.1 billion and Wells Fargo (WFC) has $5.7 plus $12 billion originally held by Wachovia.