However, the penalty for doing this is your cost basis resets to 0 each time you switch back into the the GVUL

GVUL Investment Math
 

I’ve been doing some GVUL napkin math.

Earnings on the investment portion are currently 4% with a guarantee return of 1.5%. Using the current 4% return, 2% front load and a five year hold for a 50yo pilot, a 40,000 investment would be worth 47,700. Annual GVUL premiums over 5 years for that age are close enough to 7,700 to call it all tax free.

An investment of 40,000 in a 5 year tax free muni bond yielding 3.6 would provide the same return, so it’s barely a base hit.

The math gets interesting when you start exceeding the tax free cost basis. My initial reading indicates gains above the GVUL cost basis are subject to income tax. If you invested in an ETF using a taxable brokerage account, all gains would be subject to capital gains tax. At some point the lower tax rate on a zero fee investment overcomes the 2% front load with a portion of tax free earnings.

A better approach would be a conservative investment mix in a taxable margin account. You have better investment control and the option for a tax free loan. Gains are subject to a lower tax rate in the event of a withdrawal.

This was a flag for me. Taxable account and the LT capital gains are 15% (20% once your married AGI above $553k).
Investment above the cost basis on the GVUL is confirmed ordinary income tax, 24?28?32%+state. No thanks.

And to clarify, the 2500 x Top captain rate does NOT change at all? Literally just imputed income changes? (Looking only at the life insurance aspect).

Correct.

(And if you die, the approx $1.1M life insurance policy pays tax free for both plans)

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Income tax free.

​​​​​It can still be subject to state and federal estate taxes. IMHO the "tax free" death benefit is an overhyped non-benefit.

So is the consensus that the GVUL is good for the life insurance part, just not the investment. Seems like there is no downside for life insurance…..

I've listened to the podcast, I watched the webcast, and I skimmed the prospectus. In my opinion, everyone should elect GVUL over the current term insurance. Purely because the GVUL results in lower imputed income (and in turn, lower income taxes) for the same benefit, and also because it is portable and because a pilot can elect to continue the policy after age 65 if they choose to take over the premiums. This alone benefits EVERY pilot.

Now, I think before anyone elects to dive into the investment side of this (which you don't have to), you need to be very careful and either run some scenarios out on a spreadsheet, or have a financial advisor look at it. I do think there is some tax-free value to unlock on the investment side since the Delta-paid premiums are part of your cost basis whenever you withdraw the investment. But that's after a 2.25% front end load, and a $25 withdrawal fee. I'm trying to get more accurate numbers on what the Delta-paid premiums are so I can run some scenarios.

It's on the Met Life site with the imputed income comparison.

What I meant was I'm trying to get more precise numbers than what is there. Those seem like very broad age ranges. I figured the premiums change every year. Maybe I'm wrong.