[Congressional Record (Bound Edition), Volume 149 (2003), Part 2]
[Extensions of Remarks]
[Page 2043]
[From the U.S. 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, January 28, 2003

  Mr. GREEN of Texas. Mr. Speaker, I rise today to reintroduce the Life 
Insurance Employee Notification Act of the LIEN Act for short. As a 
strong supporter of the American worker, I am here on the floor 
reintroducing legislation to stop American companies from profiting in 
the deaths of their employees. Last year, over 50 of my colleagues 
joined me as cosponsors on this important consumer protection 
legislation. Excellent investigative reporting by the Houston Chronicle 
brought this unsavory insurance practice to my attention. Businesses 
operating in Texas are purchasing secret life insurance policies on 
their employees without their knowledge or consent. 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 or ``Key Man 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 chance 
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 again cosponsor this important legislation 
protecting all hard working Americans from dead peasant insurance.

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