Group Term Life Insurance

[katieinny]

An employer has set up the plan to permit a greater death benefit for long term than for shorter term employees. If an employee terminates service and is then reemployed 3 years later, would the prior service count so that he gets the higher death benefit, or would he have to start accumulating years of service again before getting the higher benefit?

[Kirk Maldonado]

katieinny:

While this is completely non-responsive to your question, have you checked to make sure that you don't have any non-discrimination issues here under section 79?

[GBurns]

I think (hope) that this is just a matter of writing style.

What are the limits on the death benefit?

Is it the "core" amount that is limited or is it the "buy up"?

Are these employees separated as a class? If so is length of service the only criteria?

[katieinny]

Frankly, I was assuming that someone else (the insurance agent?) confirmed that there isn't a discrimination issue a long time ago when this was set up. So, I wasn't concerned with the difference in benefits -- only whether they have to offer the higher benefit to the rehired employee.

I'll see what I can find out about who checked out the issue way back when, but I'm getting the idea that you think something may be amuck here. My understanding was that the employer pays for the coverage up to $50,000 for employees with less than 15 years of service and $75,000 for employees with over 15 years. But since that wasn't my focus, I might not have the facts right.

[Sandra Pearce]

Also, remember there are tax implications for the employee on any employer paid group term life in excess of $50,000.

[Ron Snyder]

katieinny-

Other issues raised are relevant and should be addressed. The administrator of the group insurance plan should be doing the nondiscrimination testing under Section 79. However no one has answered your question directly.

Q: "If an employee terminates service and is then reemployed 3 years later, would the prior service count so that he gets the higher death benefit, or would he have to start accumulating years of service again before getting the higher benefit?"

A: It depends on the plan document or policy.

[katieinny]

Thank you, Vebaguru. We're having the agent check with the insurance company's legal department to determine whether there is a discrimination issue. They've written the policy to say that prior service will not be considered in the case of rehired employees.

[GBurns]

kateinny,

As a licensed insurance agent, I would suggest that you do not rely on any insurance agent to clarify anything with any insurance company. You are leaving your comapny exposed to any errors in translation, interpretation, understanding etc.

It is too important an issue for He said that she said.

And get everything in writing.

[Guest Ralphie]

I've found much of my insurance through this website

Life & Health Insurance Quotes

[GBurns]

I guess that you do not have much in the way of requirements and standards.