Pre-retirement death benefits

[Guest nsapper]

Can anyone provide statistics on the types of pre-retirement death benefits plans offer? In particular, the prevalence of pre-retirement death benefits by level of benefit: % of plans that provide minimum J&S 50, as well as % and types of other benefits.

Thank you!

[david rigby]

Don't know if there are any reliable statistics. but some observations:

- Many plans provide the minimum QPSA, or something close; my observation over 25 years is that this death benefit covers the largest number of participants, although there may be more plans with other definition.

- One reason for the above is that the employer may already offer death benefit protection in the form of group life insurance. It usually is not an expensive employee benefit.

- Many small plans and/or family-owned businesses offer a more substantial death benefit inside the pension plan, whether or not there is group life insurance. Those in this category often offer the PVAB as the death benefit. Note the other difference here: a lump sum will probably be offered as an alternative to a survivor annuity.

- There can be a number of variations, but my hunch is that they have much lower prevalence. Of these, the most common is probably a lump sum defined as 100 times the (projected) monthly benefit. This is a carryover from times when almost all employee benefits were funded thru insurance products.

- Another death benefit could be permanent life insurance (as distinguished from group term). The amount could be some multiple of the benefit or of salary, etc. This is not as common, for all the reasons above, but there are some situations where it can be useful.