Headline Was In Error

Tweet

The headline for the illustration for the Personal Finance article on Retired Lives Reserve (April) is misleading. The figures are apparently for a conventional whole life policy with the insured as the owner and the corporation paying 100% of the premium. But it is clear from Section 79 of the Internal Revenue Code that this kind of policy does not qualify as a group life insurance plan, as the headline for the chart suggests.

A conventional group term life insurance plan would not have any cash value at age 65. And if the policy on the chart is a split plan, in which a portion of each insured person's coverage is a conventional whole life plan and a portion of it a true group term plan, then only a portion of the premiums paid by the corporation would be taxable as compensation to the employee, not the entire $60,200 premium shown as "taxable as income to employee."

EDITOR-NOTE:

Mr. Turner is correct. The figures are for a company-paid whole life insurance policy. The headline writer erred in labeling it a group insurance plan.