Distribution of insurance primer?

I can count on my ten fingers (and not use all of them) the number of plans I've dealt with that allow participants to purchase life insurance.

And even less experience in what to do when it comes time to distribute those policies when they terminate employment.

Are there good resources that explains when needs to, or can be, done in these situations?

I'm not sure if this participant wants to keep the policy or cash it out.

Any ideas would be much appreciated.

There used to be decent directions but that was back in the '80's when this was more common. Ask the insurance agent to get something from his home office. That will likely help. If not, I dealt with a lot of them back in the day and will help as I can. we can discuss if you prefer.

Beyond Bill Presson’s gracious offer, several BenefitsLink discussions speak to some questions you might have. These include:

https://benefitslink.com/boards/index.php?/topic/66061-life-insurance/

https://benefitslink.com/boards/index.php?/topic/68502-prohibited-transaction-purchase-of-life-insurance-from-plan/

https://benefitslink.com/boards/index.php?/topic/67649-rev-rul-74-307/

https://benefitslink.com/boards/index.php?/topic/67772-pte-79-60-commission-for-an-insurance-agentbroker-who-is-the-employer/

Also, some BenefitsLink commenters, including Gary Lesser and Larry Starr, are coauthors of Life Insurance Answer Book: For Qualified Plans and Estate Planning.

We have customized forms, but it's hard to cover all of the possible scenarios and helps to figure out ahead of time what the participant wants, and the bacckground for that discussion is mostly in my head.  Off the top of that leaking head, s/he can

1) take the policy as part of a distribution (taxable, but cumulative PS-58 costs can be recovered); the balance can be taken in cash in which case WH on the insurance must also be taken, or rolled over in which case you don't have to WH on the taxable part of the policy, 2) surrender the policy and add it to the other monies distributable and do what they want (but still, PS-58s are recoverable), or 3) buy the policy so the cash paid becomes part of the rest of the monies (but PS-58s are still recoverable).  

There is a twist on #3 where the plan borrows "a lot" of the money from the policy and the loan proceeds become part of the other monies, and the participant buys the stripped down policy and that payment also becomes part of the other monies, or, in a perfect world, they borrow just enough to leave the policy worth exactly the cum PS-58s, and then the policy is distributed effectly tax-free.  They must understand that the stripped-down policy will probably require loan repayments to keep it going.

Of course the agent understands all of this and can help explain. Bwa-ha-ha!

Let me know if you need to see what the forms look like and I'll see what I can find.  If is thankfully a very rare occurence these days.