Editorial
Rod Ellis Sells Out on Opposition to "Dead Peasant" Life Insurance
by
R.H. Meyer
May 19, 2003
In an article by L.M. Sixel in the May 9th edition of the Houston Chronicle it's reported that Texas Senator Rodney Ellis has changed his position in opposition to dead peasant life insurance and now supports a position that will allow companies to purchase life insurance on employees.
According to the article companies will still be able to buy life insurance on low-level workers, but only with their consent and only in amounts that are "reasonably related" to the company's unfunded liabilities in their pension and benefit plans. Companies would also be forbidden from coercing employees to participate or making approval a condition of employment.
Well Rod, I have some news for you. Only grossly mismanaged pension and benefit plans have "unfunded liabilities". If they have to rely on "dead peasant" insurance to fund those liabilities, they're already in deep trouble.
Second, life insurance is, at best, an educated gamble. Actuarial tables are not adequate predictors for small groups. Those "unfunded liabilities" could easily grow into huge unmanageable unfunded liabilities if people refuse to die according to plan.
Third, only an idiot thinks he can make a profit on life insurance, unless s/he has some way of "beating" the actuarial tables. In the long run, premiums plus ROI must exceed payments, or the underwriter loses money. Underwriters are not in the business of losing money and they're a whole lot smarter about actuarial tables than the dimwits that fall for a COLI scam. Companies are a lot better off just investing the money they would have paid for premiums themselves and not paying sales commissions and administration fees.
Regarding "voluntary" participation, Rod, what's your plan for enforcement here? This is an "at-will-employment" state. Companies don't have to explain why they fired someone, or why they refused to hire someone. The burden of proof lies with the fired employee or the rejected applicant. Now, how do you expect an employee who was fired for refusing to participate in an irrevocable "dead peasant" insurance scheme to prove his case? It's quite likely s/he will not even have a clue as to why s/he is being fired or rejected. How are you going to guarantee that employees are not going to be retaliated against for refusing to participate? Are you really that naive?
Obviously, this is a sellout on Rod Ellis' part. He makes a big splash with his opposition to "dead peasant" insurance and now, probably for political reasons, and when he thinks no one is looking, he's backing off. To save face, he talks about "amounts reasonably related to unfunded liabilities." The bill he's proposing actually exacerbates the problem. With friends like Rod looking out for us, who needs republicans?
This editorial is a statement of opinion by the management of TexasSportsNetwork and TexasSportfishing.com who take sole responsibility for its content. You may direct your comments to: rhmeyer@yahoo.com.
Copyright © 2003 R.H. Meyer - All rights reserved.
More:
S.B. 137 - Authorizing companies to purchase irrevocable "dead peasant" policies on employees. Authored by Sen. Rodney Ellis, D-Houston
H.B. 152 CERTAIN LIFE INSURANCE POLICIES INSURING EMPLOYEES PROHIBITED. Authored by Rep. Ron Wilson, D-Houston
Are you concerned about corruption and big money influences in Austin? Read this from Public Citizen.
Wal-Mart shows evidence of "collective psychopathy" when it takes employee exploitation to ghoulish heights with "dead peasant" life insurance policies. (Editorial by R.H. Meyer, TexasSportfishing.com)
Bill would end tax advantages for death benefits. By L.M. Sixel - Houston Chronicle
A few months ago, only a handful of people had ever heard of "dead peasant" life insurance. But word has gotten out now that Wal-Mart and a few other companies have been sued for taking out secret life insurance policies on their employees and keeping the proceeds when the workers die... More (L.M. Sixel, Houston Chronicle)