Corporate Owned Life Insurance are life insurance policies corporations buy on their employees whereby the corporation is the named beneficiary. This practice, at least initially, was adopted as a way of insuring a company against the loss of a limited number of key executives. These policies also became attractive because both premium returns and benefits paid were not taxed. Over time large companies, like Walmart, purchased these policies on millions of employees increasingly for the tax advantages and, industry executives argued, to provide or afford employee and retiree medical benefits. Beyond the moral objection of profiting from an employee's death, even in instances where the person dies years after they left their employer, these polices perversely incent companies to compromise on insuring employee health and workplace safety. While regulatory limitations have been placed on these policies, in 2007 dead peasant's insurance was estimated to account for 30% of the life insurance market.
During this 22 minute podcast Peter explains what is an "insurable interest," whether we know how corporations use the income derived from these policies, whether employee consent is required, the outcome of law suits filed by surviving family members against corporations for this practice, reforms made in 2006 to better regulate this practice and whether these policies do indeed on balance undermine insuring worker safety and health status.
Professor Peter Kochenburger is the Executive Director of the University of Connecticut's Law School’s Insurance Law Center. He also serves as Director of the Law School’s graduate program, is a Consumer Representative for the National Association of Insurance Commissioners and is an Associate Editor for the ABA Tort Trial & Insurance Practice Law Journal. Before joining UConn. in 2004 Professor Kochenburger spent eleven years as Counsel at Travelers Property Casualty, where he managed coverage and bad faith litigation, as well as legislative and regulatory affairs across such subjects as workers compensation, OSHA, guaranty funds, tort reform, antitrust, and environmental issues. His professional experience also includes serving as an Assistant Attorney General in the Consumer Protection Division of Iowa’s Department of Justice and from 1986-1988 he served as Special Assistant to the dean of the Harvard Law School. He is a graduate of Yale University and Harvard Law School.
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What Is "Dead Peasant's" Insurance: A Conversation with Peter Kochenberger (March 20th)