Usually I can pick up finance stuff rather easily but this GVUL stuff seems overly complex. Combined with the bad rep of whole life insurance schemes I'm likely going to pass

I'm inclined to as well..but the more I look into this, I'm more intrigued. I would never buy this type of life insurance myself, but because it's paid for by Delta it might actually be beneficial (even just for the imputed income differences) with no risk of losing out on returns elsewhere.
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Yeah I'm skeptical, but in the end if the death benefit is the same either way, and the GVUL has a lower tax burden, then that just seems like the best way to go. Even if all the other parts of it are crap it won't really affect anything.

The way this is being rolled out, one might suspect we’re being set up for the sales tactic of hitting positives and leaving the not so great in the fine print only to be discovered after. There is no reason that all the literature being offered to us until now doesnt include investment options and associated fees from using that side of the plan. I’m inclined to use the Gvul option for the insurance side, but am not getting the warm fuzzies necessary to seal the deal.

I registered for one of the GVUL webcasts. I hope it easily answers all my questions

"seal the deal?" really? Either get GVUL or don't. I can assure you no one cares.

Rude. I for one am curious about others' analysis and opinion on this new plan.

Is there cash benefit you can take with you when you retire? That's the only reason I'd do it, more money for me when Delta is done paying for it.

Notes from the Webinar tonight:

1) The GVUL is applicable to the Delta paid insurance (2,500 times the 12-year captain rate) not the supplemental term available from Delta.
2) If you choose GVUL the first $50,000 remains term and the rest transitions to GVUL
3) Enrollment period 1 Nov - 17 Nov
3a) Complete enrollment 27 Nov - 20 Dec
4) GVUL is permanent and portable
5) Variable range of investment options (low to high risk tolerance)
Or
6) Interest bearing account (guaranteed fund account) current minimum rate of return 4%. Will never go below 1.5%. Can only move 25% of funds out of this account into the variable funds.
7) Tax free transfers between accounts
8) Expense charges: 2.25% expense charge for additional funds added above what Delta pays
9) Tax advantages: All earnings are tax deferred. Access to cash value when needed without penalty. Tax free withdrawals up to basis.
10) All investment dollars are on an after tax basis (either lump sum or partial deposits)
11) Tax free withdrawals up to basis: Delta paid premiums + own invested inputs (additional GVUL premiums paid as investment)

Example:
Age at issue: 40
Ends at age 65
Premiums Delta pays: $39,282
Extra premiums paid for savings/investment: $125,568 (optional)
GVUL earnings: $93,235

Paid in total (basis): $164,850
Cash value subject to tax $53,953
Available cash value $218,803

12) There is a maximum amount that can be invested per year (changes year to year)
13) This is not a whole life policy
14) Taxes are more favorable on the GVUL policy
15) No rider options
16) No further underwriting required at retirement if the policy values are not increased
17) Basic imputed income is lower than with group term
18) If you don't use the investment option, nothing is returned to you if you surrender the policy upon leaving Delta. (Cash value would be returned and the amount over the Cost basis is taxed at your current income tax rate)
19) You could revert to Group Term during subsequent open enrollment seasons.

www.metlife.com/gvul/DeltaAirLines

The presenter handled a lot of Q&A. You can register for future webinars on the website.

I'm just a guy, but it seems to me that there are no drawbacks to the GVUL vis a vis the Group Term if you don't leverage the investment option--i.e., you get the same death benefit. If you're looking for another vehicle to diversify your portfolio you'll have access to investment accounts with GVUL. You could also just keep using your own money to pay into your usual investments (bitcoin, gold bars, whatever).

Option A: Status quo death benefit, high imputed income

Option B: Status quo death benefit, low imputed income, other ancillary benefits that are completely optional and voluntary


APC: “Sounds like a screw job! They obviously aren’t telling us everything! I bet the mean lady in Raleigh was behind this!”


Seriously, based on everything that’s been communicated and a general understanding of the two options, I can’t understand any rationale for continuing to pay excessive imputed income. We have the option to pivot to a much cheaper plan, with exactly the same death benefit. End of story. But please, stick it to the mean lady if that floats your boat.

The bolded in and in Red is what caught me by surprise in the presentation. Seems quite a hit.

I just spent an hour listening to the GVUL webinar. Sorry if this post rambles. If something needs clarification I can try to answer, but best bet is to ask during an upcoming webinar.

Long story short is I’m leaning towards signing up for it, but probably not utilizing the invest portion of the GVUL.


Highlights:
Death benefit never changes

Lower taxable income

Optional to continue the plan after retirement or separation

2.5% fee on transactions when using the investment side

Investment side has a few options At retirement pilot can:

1) keep policy until age 100 by paying premiums out of pocket

2) take cash as a withdrawal3) Roll into annuity. Any account at MetLife or elsewhere

The GVUL has the optionally we all wish existed in the MBCBP. Can opt in/out each open enrollment period. Cash basis (tax free withdrawal amount) resets to 0 each time opt in from term.


Hope that helps someone.

Presenter said there’s a podcast coming 10/25

That’s a per transaction fee, but I agree waaaaay more than I want to spend

If that type of fee roughly translates to expense ratio of other investment funds, I agree, you can get a better rate at Vanguard.

I'll switch to GVUL based on the lower rates of imputed income. I may or may not throw some money in there to keep up with the cost basis. That part is completely voluntary.

We are seeing it the same way. Did we just become best friends?

It's not a bad thing to seek the devil's advocate on the new policy. i.e. "What's the catch?"

It's seeming to me that the catch is a potentially better apples to apples policy, with the addition of potentially poor, but optional, additional investment products. Insurance is in the money-making business afterall, and it's rare that they would offer 2 very similar options, dangle a carrot in front of the second one (less imputed income), without some angle to it. I think the angle is that they expect to make more money on the additional investment side for those who choose to participate. Might be a small % on a small % of total participants, but insurance plays the % game.

Fair enough. If there is truly some massive “gotcha” boogie man that wasn’t disclosed by ALPA or Delta, I’d gladly join the group DFR lawsuit.

I could be wrong on this, but I don’t think the imputed income differences have anything to do with discretion by met life in the desperate treatment of both plan offerings. I think it’s a byproduct of the tax code and how group term vs universal life policies are treated for purposes of calculating imputed income.

Everything else being equal, smart money is on the most tax efficient option.

I've never paid attention to the imputed income tax. Roughly how much in tax savings does the GVUL provide?

Imputed income reduction ranges from several hundred for younger pilots to several thousand for older pilots. Apply your marginal tax rate to get your savings. The exact numbers for imputed income are in the links from the 9/27 FltOps email.

Thanks for the recap. I missed this webinar but hope to attend a future one.

I think what’s confusing is I’m learning GVUL is less like

“term life insurance”,

and more like

“term life insurance”+”a side investment product cleverly attached to term life insurance that is very tax friendly, but potentially muted returns due to fees”.

How in the world they get to sell this second part as insurance seems like PFM. Somehow it works?

I’d imagine self-paid premiums beyond 65 are super high and not worth continuing in retirement, so this would definitely get liquidated at 65.

Are the “2.25% expense fee” subject to increases?
Is that an annual expense charge or when you withdraw charge or when you deposit funds charge? (Or combinations?)

Seems one could run a simulation of funds in an after tax brokerage account at X%, normal taxes, and one in the GVUL with X-3%?* and factor in some transaction charges and tax on just the basis and have a good comparison.

*opinion-only, whatever rate the GVUL earns is going to be less than a clean brokerage account. MetLife will be somehow less efficient for the “house cut” on similar investment products.

Thanks I see the chart. Looks like pretty significant tax savings as you get older

Between the MBCBP, the GVUL and the deferred compensation plan (if that ever gets going), that's a pretty interesting assortment of options.

My wife is a few years younger than me, and I see there are new DPMP options for that situation as well that saves real money.

Not interested in putting my own money into the GVUL after $50k investment portion. If I were younger maybe, but I'm a little over 2 years from age 65 retirement. I guess I'll switch to the new plan for those two years for reduced inputed income tax and then surrender it at age 65 (or age 67?) retirement. I'll take the free $50k life insurance Delta pays for of course but I don't really need any life insurance at all.

Delta is still paying the premiums of the GVUL above the $50k Term. You still pay nothing unless you choose to add additional into the investment portion for increased cash value.

This is what I'm hung up on. I don't plan on using the investment option. So does this mean you would get the premiums Delta paid returned to you if you elect to surrender the plan at retirement? What exactly is the cash value if you aren't using the investment option?

I have never paid attention to imputed income. If I understand correctly this GVUL plan has a lower imputed income value and thus it will result more lower taxes? How is that possible? This plan has a lower value?

Zero. It would be just like the normal term plan. Premiums paid for the life insurance policy are just an expense.

The GVUL plan pays imputed income on the premiums delta actually pays. The term plan pays taxes based off an IRS chart. The chart says you got more value in insurance than what Delta actually paid for premiums. The difference in premiums vs the chart grows wider the older you get. The tax savings is the taxes charged on the difference between premiums and the chart. It’s probably not going to be very much for most of us, but less tax is a good thing.

Point 1: Anyone know how are cash value gains above the cost basis taxed? Long term capital gains rate or ordinary income? Is that the “modified endowment contract” tax treatment? Any gouge on this situation?

Point 2: Even if they are taxed the same, over 10, 20 years, even a 1-2% difference in rate of return between GVUL and after tax brokerage could make a huge difference with compounding.

capital gains

Exactly what I’m thinking. Why pay a couple hundred a year extra in taxes when you don’t have to

Yeah there's really no downside. The only thing I can think of is if they raise the premiums in a few years so our imputed income goes up.. but at that point we could just switch back to term right?

I don’t know if this applies to GVUL … so take with a grain of salt.

with other whole life plans … the premiums build some cash value. There are lots of options on how you can use that cash value. One way is to pay the premiums on the insurance policy.

for example …
(I’m making all these numbers up)
let’s say I have a whole life
policy that I bought at age 20. The monthly cost of the policy doesn’t change, and let’s say it’s $100 a month. At age 60,
after paying in for 40 years, my policy has a cash value of $10,000. I can stop paying the premium out of pocket and use the cash value to pay the premium for 100 months (ish…). So I can stop paying at 60, but keep the insurance until 68 ish.

would be interested to know if that’s an option with GVUL. Not particular useful if deltas only paying the premium for 2-3
years. But could be something if they’re paying for 35 years ….

Another question would be. If you take the cash value as “loans”, are those taxed?

If is like my WLI, I don’t pay taxes on it. Once I’m done taking all the cash value as taxes…you let the policy lapse and close the account.

Your example is exactly what many people with a lot more $$ than me do to replace assets anticipated to be lost to estate taxes. They create an ILIT (Irrevocable Life Insurance Trust) and the trust then purchases a universal/whole life policy with "gifts" made to the trust ($17k per person this year). Eventually, the gifts, coupled with the accrued cash value, make the policy premiums self-funding.

100 a month x 40yrs = 48k. You also have to take the compounding on it to get your final figure. Let say is 3% per year = 91k cash value.

you can pay your policy premium and it will keep growing 3% per year. It will be more than 8yrs before it will lapse.

yeah yeah. It was just rough numbers.

if that’s an option for GVUL…then you can take some significant life insurance with you after your retire for “free”

GVUL isn’t a whole life policy. I understand what you’re saying because I have a whole life policy I use for investments in that way. The webinar was clear to say this isn’t whole life policy.

Very informative podcast on this new benefit just released.

Podcast was very well done.
Highlights: investment fee was 2.25%. (Saw 2.25 and 2.5% in previous posts.) That fee was for all deposits into the “investment” side of the policy. Withdrawals also have a 2% or $25 fee, whichever less. Deposits go in after-tax basis. All investment side withdrawals below your cost basis are tax free.

For me, running side-by-side comparisons with identical ROIs, it looked like terms under 12 years, GVUL investing made sense. Beyond 18 years after-tax brokerage wins due to that 2.25% fee hammering your principal. Between 12-18 years, your individual tax rate situation could make a difference and it gets more nuanced. YMMV, DYODD, etc. If anyone has access to a monte-Carlo probability simulator, you might get some better results with some confidence intervals.