As has been stated many times in this thread, it is a no brainer to switch to the GVUL simply due to the tax savings for getting the exact same death benefit. Plus if you want to get into it the GVUL offers some portability options and investment options. But none of that extra stuff is mandatory.

I reread your post and now I’m not sure if this particular point was on the podcast or the MetLife webinar, but this is how I understand it:

Our PWA requires Delta to provide life insurance equal to 2500x highest pay rate, currently about $1.1M. This benefit is the same on the old plan or this new GVUL plan. Same cost to you: $0.

Benefit 1 of GVUL over old plan: the imputed income charged to you on GVUL is less than the old plan, and it varies by 5-year age segment. (Older pilots have higher imputed income because Delta pays higher premiums as you get closer to death. The older you are, regardless of seniority, the more this is a benefit). You still pay $0, but the value of what delta pays on your behalf increases with age. With GVUL, the plan overall has less imputed income to you, which in turn will save you money on taxes. Bottom line: if you die, the life insurance on both plans pay the same amount + GVUL will save you money on taxes.

Benefit 2 of GVUL: For some in the weeds reasons, GVUL has an option for the pilot to pay additional money to your individual policy for investment reasons. The policy is portable if you quit, retire, or get fired, BUT once you leave, you have to takeover paying for the premiums delta was paying if you want to continue having the $1.1M life insurance policy. If you quit paying or don’t want to pay those premiums, no problem, you can unwind the additional money you put in, PLUS any investment returns those monies made. The options you can turn that money into include cash, an annuity and maybe something else -> the podcast explains these options. Investment returns below your “cost basis” are tax free.

There are some drawbacks in fees to benefit 2 that makes me not want to participate in additional investing, despite the siren call of lower taxes. YMMV. (And you can change your mind in future open enrollments in how much you contribute, or if you want to change back to the old insurance plan. Podcast covers this.)

To your question, if Delta quits MetLife, your investment dollars don’t go poof, you would pull them out and pay taxes on your “cash value” (if any due at all). Or perhaps it would roll to another GVUL provider. I’m not sure technically how a change in provider would work for the whole group, but I’m confident your dollars aren’t vaporized.

On a related note, this plan has a prospectus. The fact this is something you have to call MetLife to order and read reeks of obfuscating the fees. Be careful (everyone), the fees on benefit 2 are confusing and it’s complicated.

Bottom line, Delta found another product that meets our life insurance requirements per the PWA. Since Delta saves money by paying less premiums we have less imputed income which means less tax. The investment side is just an added feature of the plan that generates additional income for the insurer at the individuals expense instead of Delta's. The investment side is a mine field of fees an cost variability which are designed to make money for the insurer.

FIFY

10char

Bold parts are not accurate.

This was brought to the negotiating table by the union, not Delta.

And the GVUL premiums, from what I’ve been told, are a wash or even slightly higher for Delta. The savings for individual pilots result from the different way that the IRS treats the premiums. The IRS uses a standard imputed income table for term plans, with the end result being the participant is charged imputed income on more than the premiums actually cost Delta.

GVUL plans are only charged imputed income on actual premiums, and are not subject to the notional imputed income table that drives high taxes on term plans.

The obsession by some to minimize what was fought for in this last contract is mind boggling.

Thanks, that is a very good explanation. Yeah, unless you really know what you're doing the investment side seems like a good way to feel like you're saving money on taxes while eating a bunch of fees. Maybe some could pull it off and come out on top but I'll stick with simpler and less opaque investing options.

It's cute that you think this is a huuuuuuge win. Win/win maybe, but it benefits the company more, they get the full cost savings while we get the tax savings and some terrible investment option. It's fine that it's been negotiated for us but the company is the bigger benefactor. Group rates are always lower. Add in the opportunity for the insurer to make more money and I bet the company negotiated some savings. I'll defer to the real numbers but sadly we will never see them. You may put the feather back in your cap, I won't contest this any longer since evidence proving either of us right or wrong is unavailable.

Umm, what? The company is paying the exact same amount in premiums if not a little more. How is that a win for them? The pilots, on the other hand, are going to save money. The union estimates $30 million in tax savings if every pilot switches to the GVUL. No pilot loses a single thing by switching to the GVUL. Yes, the investment OPTION probably sucks, but no one is forced to use that in any way, shape, or form.

how do you figure? Why would this plan be cheaper than the term life plan? It probably costs more.

with the term plan, we don’t pay imputed income on what delta pays, we pay based off some IRS table that is significantly higher than what DL pays.

A better approach?
 

Here's an insurance guy's take... I am a pilot and have been a licensed life agent for many years...
The fee loads, and myriad of charges on this are a non-starter for me... However, if all you're interested in addressing better tax treatment, you can elect the GVUL with the 50K group term and save a few bucks in imputed income. You are not required to fund this. With this agreement, the airline funds this. For me this saves roughly $3500 in taxes. YMMV... The "tax free growth" (and available loan feature I see as substandard. Why? Because it's not permanent life insurance in the real sense of the term. In my book, permanent life insurance remains in force for life as long as the premiums are paid. With WHOLE LIFE, the insurance company carries ALL the risk. Derivative products like this, transfer it to YOU. Why? WL insurance comes with 3 guarantees: Premium, cash value, and death benefit. A GVUL is a blended solution. On one side, you have a built in annual renewable term where mortality costs go up EVERY year. So... it continues to cost more every year. The offset is an side account(s) that is funded and (hopefully) performs better than the cost of the increasing term insurance it is paying for (or at a minimum moves at parity). In a boom market, the illustration looks awesome. In a down market ... not so much. I can't tell you how many 1035 exchanges I've done out of UL/IUL/VUL contracts to permanent insurance. When the investment side underperforms (while your still loaded up with fees to boot!), something has to give. Mr/Ms policy holder what would you like to do? Reduce your cash value? Reduce your death benefit? Or... increase your premium? There is no free lunch. All this said...To use the correct, permanent life insurance contract, properly built for many of the stated tax advantages is a phenomenal approach. If you're interested, look into Infinite Banking. There are certified IBC practitioners out there. I'd recommend finding one. Infinitebanking.org (Yes, I'm one, but am in no way soliciting. Call another practitioner). This works...