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Whether You Call It ‘Dead Peasant’ Or ‘Key Man’ Insurance, Union Says ‘No’

by | Aug 2, 2013 1:16pm () Comments | Commenting has expired | Share
Posted to: Labor

CTNJ File Photo Reps. Jeffrey Berger and Tim Larson have been targeted by a state employee labor union for pointing to Detroit’s economic situation to support a plan to take out life insurance policies on state employees.

The two Democrats penned an editorial published Wednesday in the Waterbury Republican American, citing Detroit’s underfunded employee pension program as a major factor in its recent bankruptcy filing.

Although Connecticut is in better shape than Detroit when it comes to paying for its pension obligations, Berger and Larson said it lacks a funding mechanism for some of its retiree benefit programs.

They recommend passing legislation allowing the state to take out life insurance policies on current and former state workers, a practice they say could earn the state millions in survivor benefits.

In their editorial, Larson and Berger said the practice is frequently employed by businesses and is referred to as “Key Man” insurance.

In a Friday email to its members, AFSCME Council 4 had another term for the policy: “Dead Peasant” insurance.

The union’s message said that Berger and Larson “have been promoting the concept of the state buying ‘dead peasant’ insurance policies on the lives of state employees so the state makes money when their employees die. Not only is this bad fiscal policy, it’s morally bankrupt.”

Larry Dorman, a spokesman for AFSCME Council 4, said it was “disingenuous” to use Detroit’s situation to further a policy which the lawmakers have unsuccessfully promoted in the past. They proposed a bill in the recently concluded legislative session but it was never raised for a public hearing by the Insurance Committee. 

“They’re misreading the situation to advance legislation that has no business ever seeing the light of day,” he said, adding that Detroit was not heading toward bankruptcy “simply because its workers have pensions.”

In a Friday phone interview, Berger said he was “blindsided” by the union’s email, which he said was unfair. He said the proposal was an attempt to help state workers by ensuring the solvency of the pension and health care benefits.

Berger said referring to the proposal as “dead peasant” insurance policies was disingenuous. He said even if the state were to approve the practice, individual workers and retirees would need to approve of an insurance policy before the state took one out.

“There’s nothing being done behind the scenes or in the dark on this. It would have to be signed off on by the employee or the retiree,” he said.

Though Berger maintains that Connecticut could be headed down the same road as Detroit when it comes to its employee pensions, Dorman disagrees. He said the state has taken steps in recent years to shore up its funds.

“The bottom line is Berger and Larson have incorrectly diagnosed a problem and offered an absolutely incorrect solution,” Dorman said.

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(5) Archived Comments

posted by: dano860 | August 3, 2013  7:50am

If it saves cash what is so wrong with it?
When you are dead what do you care!
That is like me taking out life insurance for my family and loved ones, if they worry about the expenses after I die then they had better buy the stuff. I can’t see me paying today for them to enjoy later…not happening!
Damn the Unions!
Support a Right to Work State.

posted by: perturbed | August 3, 2013  11:34am


Hugh—Two key pieces of information are missing from this piece:

1) Will Reps. Jeffrey Berger and Tim Larson be collecting state pensions and enjoying state health care benefits when they retire?

2) If so, will they volunteer to be the first state employees with life insurance policies taken out on themselves with the state named as the beneficiary?

I honestly cannot understand why this information would not be included in the story. Please let us know…


posted by: Matt from CT | August 3, 2013  6:39pm

Is it that they don’t get how insurance works, or they don’t care as long as the insurance brokers are handing them bags of cash?

On a pool as large as Connecticut State Employees, you will pay more in premiums than you will ever collect.  The actuaries will make sure of that.

Life insurance for normal families is a knowing gamble—most families will lose money, but in exchange they know if a rare event of an early death strikes their family, they will have a financial cushion.

It doesn’t work that way with a large pool—then it will be like going to the casino, the odds WILL be in favor of the casino, ALWAYS.

posted by: art vandelay | August 3, 2013  9:15pm

art vandelay

What the state employee unions are doing to the taxpayers of Connecticut is “Morally Bankrupt”. No employee be it from the private sector or public sector “rape” the stockholders or taxpayers by retiring at the ripe old age of say 55 with pensions for life equalling or exceeding their salaries.  They should also not be entitled to Rolls Royce health benefits for their entire lives.  Berger & Larson are 100% correct in obtaining life insurance policies on Tier 1 state retirees.

posted by: Salmo | August 4, 2013  11:25am

Who says Connecticut is better off than Detroit?

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