And because the plan is on a group platform, the
life insurance policy is a guaranteed issue product. There is no medical underwriting as long as the employee is actively
working. In most cases with larger
groups, the death benefit may be over $1,000,000. And because these products are rated for the entire “book of
business,” the cost for the life insurance has been less then the cost of a
group term policy in the past (rates for new business change based on the
claims experience of the pool).
As mentioned above, the capital gains from the
investments are not taxed as it grows.
But the plan does operate similar to a Roth retirement plan in that the
contributions are taxed, but the withdrawals are not up to the basis (amount
paid in). But like all insurance
policies with cash value, the funds in excess of the basis may be withdrawn
tax-free if withdrawn as loans.
