The death benefit only plan isn’t a new breed of insurance. As far back as the 1920s, companies tested the waters by providing insurance coverage for employees. And by World War II, most US employers began adding life insurance to their benefit packages to attract and retain employees. Some things never change.
Today, companies – and employees – agree that death benefit only plans are an extremely popular perk. DBOs make economic sense and are subject to less complex tax rules and ERISA regulations than a nonqualified deferred compensation plan. Further, they aren’t cost-prohibitive, especially when purchased for the younger generation.
Another bonus is that employees aren’t subject to income tax on the value of the life insurance policy – and survivor benefits are seldom subject to estate taxes. The greatest benefit is the serenity it brings to the family.
While these policies are less complicated than others, it’s always wise to speak to an expert. Click on the link to learn the simple truth about DBO basics.
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