RETIREES SUING SEARS OVER SLASH IN VALUE OF LIFE INSURANCE POLICIES
NEW YORK — A group of 38 retired workers is suing Sears, Roebuck & Co. over its decision to slash the value of their life insurance policies.
Sears said the decision affects 84,000 people, but the plaintiffs contend it affects as many as 100,000.
“It’s a question of bringing our costs in line with the competition’s, in a very tough retail environment,” a Sears spokeswoman said Friday. “We felt this was a change that would have a minimal impact on retirees, yet have a substantial cost savings.”
The lawsuit, filed last week in U.S. District Court in Chicago by the retirees, demands Sears “restore the full value of life insurance policies to each and every retiree affected by the cuts.”
Sears said last month that workers who have retired since Jan. 1, 1978, will see the value of their company-paid life insurance plans drop to $5,000 over the next 10 years, regardless of their previous value. The average policy at Sears is valued at about $17,000, the spokeswoman said. If retirees want to maintain the higher values, they must buy replacement insurance that would become more expensive as they grow older. Further, Sears noted it will cease offering life insurance altogether to workers who retire after Dec. 31. Retirees and current employees will also be required to pay more for their medical insurance.
Sears is one of only three major retailers offering life insurance to their retirees, according to the spokeswoman.
A survey of 18 major U.S. retailers conducted by Sears found that only Kmart Corp. and the TJX Cos. offered similar programs.
She also pointed out the average value of life insurance policies offered by all Fortune 500 companies is $5,000.
The lead plaintiff in the recently filed suit — former Sears worker Marie A. George of Warwick, R.I. — will see the value of her life insurance policy plunge $11,800, according to her complaint.
“It is grossly unfair to target the most vulnerable segment of the Sears family of employees by breaking a longstanding commitment,” George said in court papers. “These life insurance benefits were promised.”