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| February 25, 2009: (US): STOLI, COLI, BOLI, DPLI...The alphabet soup is simmering up... |
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DPLI, or "Dead Peasant Life Insurance" is the up and coming entree item on the litigation billing plate in the US. In simple terms, "Dead Peasant Life Insurance" policies are a subset of COLI (Corporate Owned Life Insurance). The DPLI subset of COLI relates to life insurance policies that were/are, sometimes secretly, taken out by corporations on the lives of unwitting employees - a financial maneuver that can yield sizable tax breaks for companies. These instruments are now spawning an increased level of litigation activity.
In OK (Havenstrite vs. Hartford Life, No 4:2008CV00410) a Federal judge recently ruled that employees have grounds to litigate against an insurance company for selling and maintaining secret life insurance policies on their lives. In that case the plaintiffs claimed that the insurance company unlawfully misused their names, SSN, and other personal information to market and sell their product. In another case, the insurance purchasing corporation (Wal-Mart VS AIG Life Insurance Company and Hartford Life Insurance Company) is claiming that the Defendants failed to warn the company of the inherent dangers in buying COLI policies. Banks are also on the lawyers' menu. According to recent reports, two lawfirms in TX say that they are soon to be announcing lawsuits against major players in the banking industry who are being accused of taking out COLI-BOLI policies on the lives of low-ranking employees, such as tellers. It is alleged that these banks took out the COLI-BOLI policies without the employees' consent, and in some cases, without informed consent. According to reports, it is alleged that nearly half of all US banks have reported having Bank Owned Life Insurance" (BOLI) on employees... get this, at an estimated value of $120 Billion. The saga continues... in a complaint filed on Monday, subsequent to receiving treatment for brain cancer, the bank told the plaintiff's husband (an employee of the bank) that he was eligible for $150,000 of supplemental life insurance. The plaintiff signed up, and 4 months later, was awarded with a pink slip (fired). The plaintiff died in 2008, at age 41. The beneficiaries received no life insurance death benefits because the coverage was or seemed to have been terminated with the termination of employment. But... Last December, the plaintiff received a cheque for $1,579,399.10 from the insurance company - payable to the bank (apparently the envelope containing the cheque was misaddressed... ooops). The plaintiff claims that the bank knew that her husband was cognitively impaired when it asked him to sign the consent and agreement forms... and withheld from him that the bank (which subsequently fired him) would stand to receive such a windfall on his death. The lawsuit seeks to have the consent agreement invalidated so that the death benefits would flow to the deceased's estate. E.&O.E. |
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