For years, large corporations and banks have purchased life insurance policies on the lives of their lower-level managers and hourly employees, often without the employees’ knowledge or consent. Employers make themselves the beneficiaries of the policies and receive the huge benefits when employees die.
Houston attorney Scott Clearman of The Clearman Law Firm is responsible for uncovering this perverse practice in Texas and nationwide.
This insurance is called by a variety of names, such as Business-Owned Life Insurance (“BOLI”), Bank-Owned Life Insurance, Employer-Owned Life Insurance or Corporate-Owned Life Insurance. Some in the insurance industry have called it “dead peasant” or “janitor” insurance.
Why is this a big deal?
BOLI makes big money for many banks and businesses. But this comes at the expense of their employees.
In 2003, the U.S. General Accounting Office reported that one-third of FDIC-insured banks held $56.3 billion in BOLI policies on their employees. As of 2007, banks held $120 billion in BOLI policies.