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    The Appeal of Executive Group Life Benefits

    The Appeal of Executive Group Life Benefits

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    Talent drives performance. Attracting top talent is a challenge all companies face. Executive group life (EGL) can be offered as a voluntary or employer-paid benefit that can help you attract stellar candidates and gain a competitive edge because it provides key employees with enhanced life insurance that includes the opportunity to accumulate account value.

    While employer-sponsored group life insurance programs often don’t cover the higher income protection needs of senior leadership, EGL generally offers executives a higher income-tax-free death benefit with a group rate and guaranteed issue coverage without the hassle of full medical underwriting. Employees can also pay additional premiums (within certain limits) to grow their account value, and access the available account value for future lifestyle needs like funding education costs and supplementing retirement income. And unlike most group benefits, the coverage is portable, meaning employees can take it with them, even if they leave the company1.

    How It Works

    This program is ideal for highly compensated professionals. The coverage can offer peace of mind to employees, knowing that they have taken steps to help protect their family’s financial security after their death.

    Unlike most group insurance programs, EGL allows the executive to make additional premium payments. While the higher death benefit would be attractive by itself, the ability to potentially accumulate account value and access it during your lifetime is a valuable component. For example, EGL can help provide additional funds to supplement retirement income.

    By paying excess EGL premiums, employees can begin accumulating account value that will be accessible to them in the future. They can take a generally income tax-free loan or withdrawal up to the policy cost basis to help fund a child's education or other expenses, without surrender charges2. EGL's tax-deferred accumulation can be a great way to help pay for post-retirement expenses like health insurance, provide supplemental income, and more. Depending on the death benefit option selected, the accrued funds could also be used to increase the value of the death benefit. 

    Keeping the Plan for Life

    EGL is purchased at a group rate, employees apply for it once and can keep the coverage for life as long as there is sufficient account value to pay the monthly charges. They only need to go through underwriting one time because the product is portable, meaning the coverage does not terminate if the employee leaves the company. In addition, employees can pay additional premiums to accumulate account value. EGL is an appealing option to attract and retain key talent. It provides the competitive edge that can help your company meet the needs of highly compensated employees.

    1 Premium costs for employees who leave the company may be higher than for employees who remain with the company.

    2 Withdrawals and decreases in Face Amount may have tax consequences. You should consult your tax advisor. Certificate withdrawals are not subject to taxation up to the amount paid into your certificate (your cost basis). If the certificate is a Modified Endowment Contract, certificate loans and/or withdrawals will be taxable to the extent of gain and are subject to a 10% tax penalty. Loans and/or withdrawals also reduce the cash surrender value and death benefit. Taking a policy loan could have adverse tax consequences if the policy terminates before the insured’s death.

    Access to account values through borrowing and/or withdrawals will reduce the cash surrender value and may reduce the policy death benefit. Taking a policy loan could have adverse tax consequences if the policy terminates upon lapse or surrender or before the insured's death.

    The information contained in this material is not written or intended as specific tax or legal advice. Neither MassMutual nor any of its employees or representatives are authorized to give tax or legal advice. Individuals are encouraged to seek tax or legal advice from an independent professional advisor.

    Insurance products issued by Massachusetts Mutual Life Insurance Company (MassMutual) (Springfield, MA 01111-0001) and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company (Enfield, CT 06082).

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