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Life Health > Life Insurance

Insurers Vs. Michael Moore, Part II

By Allison Bell

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Insurance groups are working to counter criticisms of corporate-owned life insurance that surface in a new documentary film.

Michael Moore, who drew attention to concerns about the U.S. health finance system in the documentary Sicko, includes references to corporate-owned life insurance in his new film, “Capitalism: A Love Story.”

The film implies that some employers are using COLI to profit from the deaths of their employees.

“Mr. Moore’s assertions on COLI, and subsequent media reports, mischaracterize the truth about these insurance policies,” according to a statement about the film issued by the American Council of Life Insurers, Washington; the National Association of Insurance and Financial Advisors, Falls Church, Va.; and the Association for Advanced Life Underwriting, Falls Church.

“COLI is a life insurance policy used by employers both to protect against the financial cost of losing a key employee as well as to help provide funds for the payment of employee and retiree benefits through coverage on highly paid employees,” the groups say.

Recent changes in federal laws “limit COLI to coverage of highly compensated employees and require the informed consent of the insured individuals,” the groups say.

Employers must get informed consent from employees before enrolling them in COLI plans, and they must demonstrate a clear insurable interest between the owner of the policy and the insured, the groups say.

“COLI policies provide employers with a predictable stream of future income vital to long-term planning,” the groups say. “Businesses gain the peace of mind that they will not have to close their doors or reduce employee benefits following the death of key employees.”

The Association for Advanced Life Underwriting Falls Church, Va., is emphasizing that Congress already has changed the laws that apply to COLI.

Rep. Luis Gutierrez, D-Ill., recently introduced a bill that could prohibit employers from carrying life insurance on any employee with a salary under $1 million per year, but that bill has no cosponsors and is parked in a committee on which Gutierrez does not serve, AALU Chief Executive Officer David Stertzer says.

“The false information prompting the legislation is that employers are taking out policies on rank and file employees without their knowledge or consent,” Stertzer says. “We have met with Rep. Gutierrez’s office and are providing the facts about COLI to ensure that harmful, wholly unwarranted legislation does not move forward and that the image of our products is not unfairly damaged.”

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