Agreed. Podcast was great. Convinced me to sign up for the GVUL but run far far away from the investment side

Why is that? I didn't get the same impression on the investment side. It's likely not the best investment out there, but if you don't use the investment side up to gains at a minimum of the cost basis you are leaving money on the table. That assumes you would have invested the same money in a brokerage account.

From the podcast and webinar, the deposit fee is a ONE TIME front load fee. Then the nominal fee for withdrawal. With the withdrawal fee it'll likely be best to do big withdrawals all at once vice more frequent withdrawals that get the fee each time. Your gains are then tax free up to the total cost basis. So if Delta paid premiums worth a total of say, $20k over your employment terms you get to withdraw $20k of gains (plus your initial investment amount) while avoiding the tax man. It's like a roth plan with restrictions on how much you can get back tax free. Still better than paying capital gains on all of it, IMO.

The fee load for each investment option wasn't covered, although I thought I heard them say they were no fee. So unless you are using something like individual stocks or FZROX, you're likely to beat out other investment options with even low fees in the long run.

I plan to switch over. I will use the investment side sparingly and where it makes sense to optimize taxes. There are also a couple options for what to do with you investments after you retire. Can use the money in there to keep paying the plan premiums and keep the death benefit longer. Another option is to not touch the investment side at all and pay the premiums yourself. Then when you die your beneficiary will get all of the money, death benefit and investment side completely TAX FREE.

Bottom line, there are options. What is best for each person regarding the investment side is up to them. I personally like tax-deferred/tax-free options. YMMV. I just didn't get the same vibe about staying far away. Love to hear why

You have to dig with MetLife to get fee details. The investment options, while no “front commission”, had annual expenses of 0.40-0.88% (from the few I saw) on top of the 2.25% initial deposit fee and withdrawal fee and other fees. Sadly the fees really eat up the tax savings when I ran my own numbers for a long term investment.

I plan on just taking the imputed income savings and moving on. Not everything has to be a grand slam.

With the MBCBP and soon to come non-qual plan, I think we have more savings ability than most will ever need.

Me too. Going the minimum GVUL plan, will re-evaluate investment side of it during open enrollment 2025.

Good to know. I looked around but couldn't find the actual investments either. Definitely a piece of the puzzle. I'm a low cost index kinda investor so the fees will for sure be something that I take into consideration before putting much in there.

My calculation shows a current estimate of ~$40k in premiums paid in my remaining career. I figure that gives me plenty of time to do a full evaluation on if this new, additional, investment vehicle makes sense. Combined with the 401k, the after-tax (and Mega back door) option, MBCBP, HSA, FSA, and IRA options this is just another tool in the toolbox.

I'm with you guys though. They don't all have to be home runs. I'm happy with the RBI double. The life insurance portion is a no-brainer. Investment side, jury is still out. I'm good with that.

Beat me to it. 2.25% deposit fees then fees on the investment options that will like underperform it’s benchmark.

I haven’t finished the podcast yet, but will finish today in the car.

But, are they saying if you deposit say 1k into the investment side, that they take 2.5% of that 1k?

I need someone to explain it to me like i'm 3. I just listened to the podcast and went through this thread. I'm scratching my head a little. Aside from the Delta provided life benefit, plus two separate term life policies my wife and I both have, all in it's in the millions of dollars, why do I need this? Lets say you have two pilots, both retired, now age 67. One opted in 25 years ago, the other didn't. Whats the tangible difference of these two peoples situations all things being equal? One boat vs. two boats?

The difference is “imputed income”, on which the IRS makes you pay income tax as if it were earned income. The GVUL’s imputed tax is significantly lower, especially as you get older. At 32% or maybe 35%, that’s potentially thousand(s) of dollars a year in tax savings.

If for no other reason than that, GVUL is worth opting into.

I'm curious about an argument FOR the current "Term" plan. Hypothetically, if the GVUL is the plan we always had, and the new plan being offered is the Term plan with it's higher imputed income/no side investment options/can't take it with you at retirement, what would be the argument for switching TO the term plan?

I'm curious because I can't think of a single reason.

100% agree.

The only "real world" example I see for remaining in the term plan is inertia--i.e., you "do nothing," you stay in the term plan. That's a pretty lousy reason (and, in your reverse hypothetical, that mindset would keep you in the GVUL, anyway), but I'll bet dollars to doughnuts that we have a substantial number of pilots do exactly that.

I guess there's also the trivial case where one has only the basic ($50K) amount of insurance, then GVUL doesn't apply....

So what are the cons of switching to the GVUL, not talking about the investment side?

None that I can see. Same benefit, lower tax bill. What's not to love?

ask the next question, who makes
money? Does MetLife make more money with whole life for 15000 pilots or term. 1-2% fees for investments adds up. Not saying it’s not an OK option for pilots.

I haven’t seen if the group plan will allow those that carry extra coverage to move that over to the group plan without a health examination. The normal term plan allowed a raise in coverage every year without an exam. Any chance the new group plan will do away with this or not carry over your current coverage levels?

Why does that matter at all? Delta is paying all the premiums no matter what. No one is forced to use the investment option at all. You can either:

Use the term life for ~$1.1 million death benefit, pay taxes on a high imputed income.

or

Use the GVUL for the exact same ~$1.1 million death benefit, pay taxes on a much lower imputed income.

It's one of those cases where the calculus is much different since Delta is paying the insurance cost either way. Would one run out a buy a whole life vs term life $1.1M policy in general? Since it is part of the PWA, unless your inclined to just decline the insurance (which apparently approx 500 pilots do currently to avoid the imputed income) it seems to make sense to take the GVUL for the lower imputed income reason alone. On the podcast the ALPA reps commented that if every single pilot switches over it amounts to a savings of $30M to the pilot group as a whole.

I think we make money, via lower imputed income taxes. I think the crux of the difference is that the current Term insurance is handled differently tax-wise than the GVUL. Tax laws are different between the two types of life insurance plans, and the GVUL *appears* to be more advantageous taxwise for our application.

And, Metlife makes some scratch on the 2.25% fee on deposits from those who choose to do so.

Someone more bored than me should run a spreadsheet of what it looks like to "invest" the saved imputed income tax dollars into the GVUL investment vehicle. Basically, zero out the change in imputed tax, put the extra into investments (taking the 2.25% hit on it), effectively paying in the same amount of dollars as the current Term plan. It'll only amount to a few hundred (maybe thousand when older) dollars invested a year, but I'm be curious what the final theoretical number would be.

I’m planning to run that illustration when I get some time. For easy math let’s say my current imputed is $1150/yr in income. Let’s make math easy and say marginal tax rate is 30%. Current plan is costing $350/yr in taxes. The GVUL imputed drops that to $350/yr and a tax bill of $105. So a $245 difference a year in my cost for the same coverage (subject to go up in each 5year age band). Now, if I put $245/yr into a 4% investment, minus a 2.25% fee… at a guaranteed 4%, for 27 years, and adjust the imputed amount to be the difference… what would that be? What about the investment options, after fees? Gotta run the math.

I don’t see any pilot hurt by going GVUL. The investment side becomes do you want to “be your own bank”, build a cash value to keep paying the premiums when you retire, or just save in taxes for the rest of your career. Enrolling makes complete sense, the rest needs some time with a spreadsheet and everyone’s numbers and outcome will be different.

I'd be curious to learn what the counter-party risks are with the two plans. If equal then great. But if Metlife or DAL going BK causes term or gvul to get hit then I think we need to know about that in advance. Will ask at roadshow unless anyone here already knows.

I believe I saw someone post a chart that showed the imputed income savings went up with each 5 or 10 year block, meaning the older you get, the more the GVUL saves you.

Is there the ability to opt back in to the company Term plan if the tax laws change and the imputed values switch? I'm assuming you could cash out any savings you have it in, without tax penalty up to the basis tax-free and then switch?

People keep saying they think 401k's will be gone after by congress. Assuming that could be the same for this. One signature and any tax savings up to your basis could be done away with as well. Not saying its likely, just maybe possible?

that’s addressed in my post. Haven’t had some time to run an illustration.

Fair enough,I guess I missed it. Just wanted to make sure that didn’t get lost.

There is NO whole life option at Delta. GVUL is NOT a whole life policy. I hope MetLife makes more money on the GVUL insurance portion. They are providing an insurance product that saves pilots money and are due a reasonable profit for the superior offering.

The investment portion is lackluster. The inclusion of insurance premiums in the investment basis provides a small tax advantage and MetLife charges a front end investment fee of 2.25% because of it. Including the cost of insurance in the investment basis is a good example of the power insurance companies wield in DC.

The podcasts mention portability and keeping the policy after you retire. Has anyone seen the premiums that we would have to pay after retiring (or otherwise leaving)? I can't find the tables on the informational website.

Terminology: The rep on the podcast called GVUL Permanent life insurance vs term life insurance.

You are absolutely correct and have pointed out one of the many nuances of insurance. The GVUL is a permanent policy with variable coverage amounts and premiums that escalate with age, as opposed to a whole life policy which is also a permanent policy with fixed coverage AND premiums or a term policy which is temporary coverage with fixed coverage and premiums.

Although permanent, the GVUL is most definitely NOT a whole life policy.

Yes. You can choose between the existing Term plan and the GVUL plan every year during open enrollment. And yes, you can cash out tax free up to the cost basis.

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)

​​​​​​
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.