Employment Verfication

[Mark Whitelaw]

Investment oriented institutionally priced life insurance (ILI) is now available for personal ownership if an employer validates the role and compensation of the employee. ILI is only available to mid-upper income white/gray collar employees. Hence, just as you can't buy retail life insurance without your doctor validating your health, you can't buy ILI without your employer validating your employment and compensation to qualify for the ILI GI risk class. Employers have no costs or administrative requirements ... simply validate employment.

Is an employer legally obligated to validate employment, role and compensation if an employee requests it, or merely a convenience?

If convenience, if employer refuses to validate thus denying coverage, is the employer at risk if the employee becomes uninsurable while employed? Obviously the employer has a credibility problem, but do they have a legal problem?

Thanks.

[J Simmons]

Investment oriented institutionally priced life insurance (ILI) is now available for personal ownership if an employer validates the role and compensation of the employee. ILI is only available to mid-upper income white/gray collar employees. Hence, just as you can't buy retail life insurance without your doctor validating your health, you can't buy ILI without your employer validating your employment and compensation to qualify for the ILI GI risk class. Employers have no costs or administrative requirements ... simply validate employment.

Is an employer legally obligated to validate employment, role and compensation if an employee requests it, or merely a convenience?

Probably depends on state employment law provisions.

If convenience, if employer refuses to validate thus denying coverage, is the employer at risk if the employee becomes uninsurable while employed?

I do not see how the employer would be liable if not legally obligated to provide the verification in the first place. Of course, various fact patterns and circumstances could change that, such as perhaps the employee dropped other insurance he had based on representation that the employer would provide a verification but then does not.

Obviously the employer has a credibility problem, but do they have a legal problem?

Yeah, this employer would be setting a very low bar for employer behavior and what not to do in employee relations. For a very minor inconvenience to the employer, the employee has a lot at stake.

[Mark Whitelaw]

Thanks John. You've reinforced what others have advised over the years ... no legal requirement to validate if asked, but a bad judgement call if they don't ... possibly opening itself up to a discrimination problem.

For those not familiar with ILI, this is the cash value oriented product CFO's of large companies buy to fund 409A plans (COLI or BOLI) ... CSV starts at 100% of contribution plus there is the death benefit protection.

By 2002 key employee risk rates had become so cheap that it became more effective for the employee to own the asset and manage it on a 100% voluntary secured basis than be an unsecured creditor in a NQDC plan. This employee advantage has increased with the passing of 409A. Some think of this as a supplemental Roth program rather than a supplemental 401(k), but ILI is not limited to the senior people like a 409A plan. Several of the leading ILI issuers offer their ILI products on an employer-facitlitated employee-owned basis, but only through TPA's that have developed the support systems required for employee-owned ILI.

Employee owned ILI is not an executive benefit, but a parity restoration opportunity for the top 35% performing white-collar roles ... everyone from the corner cubicle to the corner office. Hence, where tax-qualified plans start posing employee problems, ILI eligibility begins. Not life insurance in the traditional sense ... death benefit is not the driving feature ... but a lifelong longevity driven personal cash management program utilizing the more efficient ILI structure. ILI risk rates cost less than taxes ... ILI separate accounts have lower expenses than mutual funds. The employee is in an equal or greater cash position from day one plus has some extra protection for thier family ... the minimum required to accomodate contributions. A financial "win-win" not available in other structures. CFO's choose ILI (1) for its cash management advantages and (2) risk management. Same reasons most qualifying employees choose ILI if granted access.

Employers have no costs, liabilities or adminstrative responsibilities ... they are merely validating qualifications so these people can access a product that is not available in the retail fianncial servcies marketplace. Any employer with suffient qualifying employees can offer access to ILI. Today, workplace financial parity restoration merely requires employment verfication. An equal financial opportunity workplace for all employees. Not an employer sponsored benefit plan, but an employee access convenience ... that also solves many of the problems of employer sponsored benefit plans. Longevity has created many employer benefit problems ... and the solution. Many employers offer access as a demonstration of their appreciation of the career and life choices that have earned these employees access to a value designed specifically around them. Lots of ways employers can earn a little hero status by doing virturally nothing.

Your ending comment is 100% on point ... "For a very minor inconvenience to the employer, the employee has a lot at stake."

Take care - Mark