GROUP CARVE OUT PLANS
Most employees have a basic need for life insurance protection, even if only to provide for funeral costs. Employer-sponsored group term life insurance arose from this basic need and has grown tremendously from when the first contract was issued in the early 20th century to its current in-force level of more than four trillion dollars. It accounts for more than 40 percent of the existing life insurance in the United States and represents the only life insurance on the life of many breadwinners. Group term life insurance is, unquestionably, an important source of needed coverage for many people and an expected employee benefit.
Group carve-out plans augment this important employee benefit by purchasing additional coverage, usually in the form of universal life policies, on the lives of key personnel.
Upon completion of this Module, you should understand:
enables the key executive to overcome the group term life insurance limitation resulting from the nondiscrimination requirement;
makes formerly non-portable life insurance coverage fully portable and continuable beyond retirement;
enables the key executive to avoid Table I imputed income costs for group term life insurance coverage in excess of $50,000; and
policy cash values grow tax-deferred and may be accessed by the executive to provide additional retirement income.