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HOUSTON — Irma Johnson never really thought of herself as a crusader.
But the quiet widow from The Woodlands has been featured in a Michael Moore movie, watched her story retold on “Good Morning America” and is trying to let others know that their employers may have purchased secret insurance policies on their lives and stand to profit handsomely when they die.
The industry darkly refers to the policies as “dead peasant” life insurance.
And but for a post office error, Johnson might not have learned that when her husband, Dan Johnson, died of brain cancer in 2008, the bank that had fired him years earlier got $4.7 million in insurance proceeds on his life.
" What's especially upsetting, Johnson said, is that her husband couldn't buy life insurance to protect his own family once he found out about his cancer. Yet his employer could, she said."
Banks have purchased hundreds of billions of dollars of “bank owned life insurance” on the lives of their employees. The policies typically remain in effect years after an employee leaves the bank, Myers said.
Originally posted by Illusionsaregrander
How the hell could the bank even get insurance on someone known to have brain cancer?
They're known as "dead peasant" policies — secret life insurance policies taken out on unwitting employees — and they've ignited a forest fire of litigation that won't die down.
Since emerging several years ago, dead-peasant policies have landed numerous employers in court, accused of profiting off the deaths of rank-and-file employees. More recently, the insurance industry and banks have been dragged into the legal morass, both accused of illegally benefiting off these policies, formally known as corporate-owned life insurance policies (COLI).
In Oklahoma, a federal judge recently ruled that employees have legal grounds to sue an insurance company for selling and maintaining secret life insurance policies on their lives. The plaintiffs claim that the insurance company unlawfully misused their names, Social Security numbers and other personal information to market and sell their product. Havenstrite v. Hartford Life Ins. Co., No. 4:2008cv00410 (N.D. Okla.).
Insurance companies are also facing lawsuits by their own clients — disappointed buyers, such as Wal-Mart Stores Inc., which is suing AIG Life Insurance Co. and Hartford Life Insurance Co. over COLI policies gone bad. Claiming losses of more than $150 million, Wal-Mart claims the defendants failed to warn the company of the inherent dangers of buying COLI policies. Wal-Mart v. AIG Life Insurance, No. 579 (Del.). Officials at AIG and Hartford Life were unavailable for comment. Barry Chasnoff of Akin Gump Strauss Hauer & Feld, who is representing Hartford Life, declined comment, citing company policy.
Next on the list: banks
Banks, meanwhile, are next on the list of dead-peasant lawsuit targets. Two law firms in Texas say they are on the brink of announcing lawsuits against major players in the banking industry accused of taking out life insurance policies on low-level employees, such as tellers, without consent or, in some cases, informed consent. The firms claim that nearly half of all U.S. banks have reported owning bank-owned life insurance (BOLI) policies on employees, at an estimated value of $120 billion.
Employers Betting On Your Death
They are called "dead peasant" policies -- secret life insurance policies taken out on unwitting employees -- and they have now triggered civil litigation.
In Oklahoma, a federal judge recently ruled that employees have legal grounds to sue an insurance company for selling and maintaining secret life insurance policies on their lives. The plaintiffs claim that the insurance company unlawfully misused their names, Social Security numbers and other personal information to market and sell their product. Havenstrite v. Hartford Life Ins. Co., No. 4:2008cv00410 (N.D. Okla.). If you have been a victim of a "dead peasant" policy, contact our employment lawyers today.