[Congressional Record Volume 148, Number 46 (Tuesday, April 23, 2002)]
[Extensions of Remarks]
[Pages E604-E605]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       IN SUPPORT OF THE LIFE INSURANCE EMPLOYEE NOTIFICATION ACT

                                 ______
                                 

                            HON. GENE GREEN

                                of texas

                    in the house of representatives

                        Tuesday, April 23, 2002

  Mr. GREEN of Texas. Mr. Speaker, I rise today to introduce the Life 
Insurance Employee Notification Act or the LIEN Act for short.
  As a strong supporter of the American worker, I am here on the floor 
introducing legislation to stop American companies from profiting in 
the deaths of their employees.
  A recent article in the Houston Chronicle brought to my attention a 
business practice involving employers purchasing secret life insurance 
policies on their employees without their knowledge or consent.

[[Page E605]]

  These policies are known as Corporate-owned Life Insurance or COLI.
  Unfortunately, they also have another name, ``dead peasant 
policies.''
  They are called dead peasant policies because these Corporate-owned 
Life Insurance policies are usually purchased for the rank-and file 
employees and not the CEO, CFO, or the Board of Directors.
  Executive Insurance is the norm in corporate America and I have no 
problem with that because it is disclosed to investors and the 
individual.
  Dead peasant policies, on the other hand, are not disclosed to the 
low-level employee because he or she is not eligible to collect the 
death benefit.
  This failure to notify the ownership of the death benefit is the crux 
of the problem.
  American companies are purchasing secret life insurance on the 
chanced that one of their employees dies and they can collect the six 
figure death benefit.
  These companies have created a death derivative.
  In a large company with thousands of employees, economic modeling can 
be done to predict how many policies will be collected on in a given 
year.
  This blood money can be used for whatever the company wants, but most 
importantly it is rarely used to compensate the families of the dead 
employee.
  While I find the use of life insurance in this manner offensive, I 
understand it is not illegal and is in fact condoned in many states; 
Texas is not one of them.
  The LIEN Act is a sunshine bill that forces companies to disclose to 
the employee that a dead peasant policy has been purchased in their 
name.
  In addition, it requires the company to provide the name of the 
insurer, the benefit amount, and under whose name the policy is in.
  I do not want to ban this practice, but simply provide workers with 
more information about what the employer is doing on their behalf.
  As we saw with Enron, corporations often do not provide pertinent 
financial information to their employees.
  I am frankly disgusted with this whole practice and am amazed that 
this all began as a simple tax dodge worth billions of dollars.
  In the mid 1990s, the Internal Revenue Service (IRS) disallowed the 
classification of these policies as a legitimate business expense for 
the purpose of reducing their federal tax obligation.
  I urge my colleagues to cosponsor this important legislation to 
protect all hard working Americans from dead peasant insurance.

                          ____________________