Example 3: Can the imputed income ever be more than my pretax premium?
Yes, that can happen because your pretax premium is determined based on your age at the beginning of the year and the IRS requires us to determine imputed income based on your age at the end of the year. Here’s an example: In this example, let’s make Joanne Smith (from our first example) age 34 (not age 35) at the beginning of the year. She still makes $50,000 a year and has a Retirement System death benefit of $50,000. As in Example 1, she has elected $40,000 of NCFlex term life insurance. Now, however, due to her younger age, she only pays a rate of $0.086 per $1,000 of coverage (rather than at $0.097/$1,000). As a result, her total pre-tax premium is $3.44 per month ($40,000/$1,000=40 x $0.086 = $3.44) – $0.44 less than in Example 1 ($3.88 – $3.44 = $0.44). Total death benefit: $90,000 Excess amount over $50,000: $40,000 Table 1 rate imputed income (age 35): $3.60 ($40,000/$1,000=40 x $0.09) NCFlex rate imputed income (age34): $3.44 ($40,000/$1,000=40 x $0.086) Monthly imputed incom
