Executive Group Variable Universal Life Insurance

Transcription

1 A Leader in Employee Benefits Solutions Executive Group Variable Universal Life Insurance Prudential Group Insurance The Prudential Insurance Company of America

2 A Results-Driven Solution From a Name You Know and Trust Since 1875, the Prudential brand has been synonymous with helping people achieve financial security and peace of mind. Our well-known Rock symbol is an icon of strength, stability, expertise, and innovation that has stood the test of time. Prudential has been helping clients and their employees meet benefits challenges since 1916, when we first began underwriting group insurance plans. Today, our Group Insurance business unit is the nation s secondlargest group life carrier, with more than $2 trillion in group life insurance coverage.1 In 1998, we went beyond standard group life plans and developed Group Variable Universal Life (GVUL), a flexible insurance product that provides life insurance and investment opportunities. Our combination of financial strength, proven expertise, innovative products, and excellent customer service allows us to help satisfy the cost and value requirements of your employee benefits program. 2

3 Complex Benefits Challenges Require Real Solutions Employers face a number of complex benefits challenges as they try to meet the needs of a changing workforce. To stay competitive in the war for talent, you need to provide an enhanced benefits package in a way that doesn t increase costs or create more work for your benefits staff. Plus, you need to find a way to offer your employees a life insurance benefit that can continue into retirement without incurring Accounting Standards Codification (ASC) 715 liabilities, or taking on the administration of that coverage. Highly compensated employees encounter several hurdles as they try to protect their loved ones and their assets. They have a need for long-term coverage that does not reduce as they get older or end when their job terminates. Some executives have maxed out their contributions to a 401(k) or 403(b) plan and are looking for other ways to earn tax-deferred income outside of a qualified retirement plan. Others seek the reliable return a guaranteed interest account offers. We can help you and your executives meet all of these challenges with Executive Group Variable Universal Life (GVUL) Insurance issued by The Prudential Insurance Company of America (Prudential). Executive GVUL is long-term life insurance coverage that offers voluntary cash accumulation opportunities through a Fixed Account and/or a broad range of variable investment options. Executives will appreciate the flexibility this coverage provides not only can GVUL investments generate tax-deferred growth, those earnings can generally be passed on to the beneficiaries, income tax free, as part of the life insurance benefit. 3

4 Providing Coverage for Executives Without Adding Administrative Burden Prudential knows you need benefits solutions that meet the needs of you and your executives without increasing costs or administrative burden. That s why we provide a full suite of account management, enrollment, and record keeping services to make your Executive GVUL program as simple and seamless as possible. How Executive GVUL Works With Executive GVUL, you can separate or carve out coverage for highly compensated employees from your company-sponsored group life insurance plans. Once the executives are removed from the rest of the group, you can provide them with an employee-paid, or a combination of an employer-paid and an employee-paid, benefit using the Executive GVUL product. You can pay for Executive GVUL by giving your key employees a bonus that is tax deductible to you. The employer-paid portion is reported as taxable income to the executive. 2 Plus, they can pay additional premium dollars through payroll deduction or in a lump sum into the investment options they have chosen. Product Features With Executive GVUL, employees can obtain increased insurance coverage to meet changing needs, or maintain coverage as they age. n Life Insurance That May Continue Unlike term life insurance plans, Prudential s Executive GVUL is life insurance that can be continued at the full coverage amount up to age Participants also have the opportunity to purchase paid-up insurance. The paid-up coverage amount can continue for life with no further premiums due. n Additional Coverage Employers can choose to offer flat or fixed amounts of coverage or salary multiples to keep coverage commensurate with earnings. An Accelerated Benefit Option 4 is included at no additional cost, and a Waiver of Premium provision is also available. Spouse and child term life insurance coverage, as well as Accidental Death & Dismemberment Insurance, can be added as riders to the certificate and are employee paid. n Tax-Deferred Investment Potential Participants can take advantage of tax-deferred cash accumulation opportunities by choosing from a Fixed Account and/or a broad range of variable investment options. By making contributions to the investment options, participants can potentially build cash value, which in turn will increase the death benefit. In addition to the Fixed Account, Prudential s Executive GVUL offers a menu of variable investment options from highly regarded investment managers, including Prudential. n A Living Benefit Participants can access their cash value through loans and withdrawals whenever they want for any reason. 5 They will be notified that unpaid loans and withdrawals generally reduce the death benefit. Participants can also change investment amounts or transfer fund balances among investment options easily and without tax obligations. 4

5 Experienced Account Service Dedicated to Your Business Account Managers experienced in Executive GVUL and dedicated to handling complex accounts are assigned to individual clients. The Account Manager oversees all aspects of customer service from implementation through enrollment, as well as day-to-day support. When you select Executive GVUL as your benefits solution, your role can be limited to handling payroll deductions Prudential will take care of everything else. Extensive Enrollment Services for Strong Participation You can count on Prudential s marketing and enrollment professionals to help boost your plan participation while easing your administrative burden. We staff a toll-free enrollment services hotline with product experts ready to answer questions for your executives. You have the flexibility to choose any or all of our services, depending on the level of support you need. Prior to enrollment, we offer training and train-the trainer sessions to increase HR awareness. We also mail an in-depth enrollment kit featuring plan details, educational information, and assessment tools to your executives. During enrollment, employees have access to a web-based portal to make enrolling easy. To help further boost enrollment, we can provide professional enrollers to conduct on-site meetings. We are sensitive to the unique needs of executives and tailor our approach accordingly. Precise Contribution Monitoring Prudential s GVUL service center monitors all contributions because they are subject to plan and Internal Revenue Code maximums. If cash contributions exceed certain limits and the GVUL coverage becomes a MEC, different tax rules and, in some cases, penalties apply for lifetime distributions such as loans, withdrawals, and assignments. If this applies to participants, Prudential will notify them in writing of their status and advise them of their current options (if any) and by when they must respond. Please note that Prudential is not authorized to give tax advice; participants should consult their tax advisor. Hassle-Free Administration and Record Keeping Services You and your participants also have toll-free access to our GVUL service center, which is staffed by a specialized team of representatives dedicated to GVUL. The GVUL service center also handles all the record keeping, including: n Billing n Enrollments n Loans and withdrawals n Coverage amount and allocation changes n Paid-up life insurance and cash surrender requests n Statements, reports, and prospectus distribution n Beneficiary and assignment records management Participants will be able to check coverage, change beneficiaries, print forms, and more by going online anytime to the GVUL self-service site. What Participants Can Expect Participants pay required premium to cover the Face Amount of insurance, plus they may contribute additional premium for investment. The premium is contributed to the Certificate Fund, and each month charges for the Face Amount of insurance and other expenses are deducted. Premium for investment may be contributed, post tax, by payroll deduction and/or lump-sum payment. At any time, participants can take loans and make withdrawals to use the funds any way they want. Death benefits are generally reduced by outstanding loans and past due charges. Withdrawals up to the cost basis are typically not subject to income taxes. Loans have no taxable gain unless the certificate lapses or is surrendered. If this occurs, there will be immediate taxation to the extent of the gain in the certificate. Loans and withdrawals from a Modified Endowment Contract (MEC) will be taxable to the extent of gain in the Certificate and may also be subject to a 10% tax penalty. The Certificate Fund value and the selected Face Amount of insurance are paid to the beneficiary upon death, free of federal income tax. The Face Amount of insurance is not reduced even when money is borrowed or withdrawn from the Certificate Fund. 5

6 Expect Real Results for You and Your Executives Prudential s Executive GVUL is a sophisticated life insurance and financial product that delivers value to employees and adds a meaningful dimension to your strategic benefits program. With Executive GVUL, your highly compensated employees get so much more than with a basic term life policy. They receive, in many cases, long-term protection along with the opportunity to grow their assets tax deferred through fixed and variable investment options. Your top talent is more satisfied and your benefits costs are contained all without increasing your administrative burden. 6 As an employee benefits leader for over 95 years, you can expect great results from Prudential every time. We take customer service seriously and are proud that 95% of our clients said they were satisfied with the value of Prudential s products and services.6 You can rest easy knowing that we will be with you every step of the way, from plan design to enrollment to the payment of claims. By providing your employees with Executive GVUL coverage issued by Prudential, you can help protect their loved ones. You will benefit from a reduced administrative burden, increased employee satisfaction, and lower benefits costs. Let us help you as we have helped thousands of other employers across the United States.

7 For more information, contact your Prudential representative today or visit us online at

8 Choose Solutions That Help Deliver Results Life Insurance n Basic, Optional, and Dependent Term Life n Basic and Optional Accidental Death & Dismemberment n Business Travel Accident n Group Universal Life n Group Variable Universal Life n Executive Group Variable Universal Life Disability Insurance and Services n Short Term Disability n Long Term Disability n Integrated Short & Long Term Disability n State Mandated Disability n Absence Management n Return to Work Services Retiree Solutions n Insurance Continuance Fund n Variable Insurance Continuation Fund n Retiree Life Buyout n Group Universal Life Insurance n Group Variable Universal Life Insurance n Executive Group Variable Universal Life Insurance n Voluntary Retiree Reducing Term Life Insurance n Retiree Portability Global Solutions n Multinational Pooling n Prudential Zurich Global Benefit Solutions n Captive Reinsurance Non-Qualified Benefits n Corporate Owned Life Insurance n Trust Owned Life Insurance n Bank Owned Life Insurance Statutory Annual Statement of Prudential (Blue Book). 2 In most cases, employee-pay-all coverage under the Group Contract will not qualify as group term life insurance under the Internal Revenue Code, or be deemed to be part of a group term insurance plan. The Certificate will therefore be treated the same as any individually purchased life insurance policy for tax purposes. However, if the coverage does qualify as group term life insurance, there may be income tax consequences for you. This situation may occur when some members of the group are charged a rate for coverage that is higher than rates provided in IRS regulations while others in the group are charged a rate for coverage that is lower than rates provided in IRS regulations. In such circumstances, the IRS may consider amounts to be includible in the gross income of one or more employees whose actual rates charged for coverage for the employee s age group are less than the rates provided in the IRS regulations for determining imputed income for group term life insurance. Also, under certain circumstances, depending on the structure of the arrangement under which the Group Contract is held, a portion of the coverage under the Group Contract may qualify as group term life insurance and, in addition, participants may be taxed on certain increases in cash values under an IRS-prescribed formula. 3 At age 100, the contract matures and the death benefit is equal to the cash value. 4 Employees must have a limited life expectancy (certified by a physician) to be eligible for the Accelerated Benefit Option. Important Notice: The acceleration of life insurance benefits described in this brochure is intended to qualify for favorable tax treatment under the Internal Revenue Code of 1986-IRC Section Code 101(g). If the acceleration of life insurance benefits qualifies for such favorable treatment, the benefits will be excludable from employees income and not subject to federal taxation. Tax laws relating to the acceleration of life benefits are complex. Employees are advised to consult with a qualified tax advisor about circumstances under which they could receive acceleration of life insurance benefits that are excludable from income under federal law. 5 Withdrawals and loans may be taxable. Generally, a withdrawal is taxable to the extent that it exceeds the cost basis of the certificate. A loan is taxable at the time of lapse and surrender to the extent that it exceeds the costs basis of the certificate. Pre-death distributions from MECs receive less favorable income tax treatment and may be subject to a tax penalty. Participants should consult their tax advisors. 6 The Prudential Insurance Company of America, 2012 Group Insurance Middle Market and National Account Client Relationship Survey. You should consider the contract and the underlying funds investment objectives, risk, charges, and expenses carefully before investing. Both the contract prospectus and the underlying fund prospectuses contain this and other important information. Contact your group insurance representative for the prospectuses. You should read them carefully before purchasing a contract. Group Life and Disability Insurance coverages are issued by The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ Contract Series: Group Variable Universal Life Insurance is issued by The Prudential Insurance Company of America and distributed through Prudential Investment Management Services LLC (PIMS). The Prudential Insurance Company of America is located at 751 Broad Street, Newark, NJ and PIMS is located at Three Gateway Center, 14th Floor, Newark, NJ Both are Prudential Financial companies. Contract Series: This brochure is intended to be a summary of benefits and does not include all plan provisions, exclusions, and limitations. Additional details about Prudential s GVUL plan can be found in the accompanying prospectus. A Group Contract with complete plan information, including limitations and exclusions, will be provided. If there is a discrepancy between this document and the Group Contract issued by Prudential, the terms of the Group Contract will govern. The Real Challenges Solutions Results logo is a registered service mark of The Prudential Insurance Company of America Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide