What is the Funding Method Used for WBP Death Benefits?
The death benefit is generally provided by life insurance using a level funding method over the working lifetime of a plan participant. Rates are calculated using guaranteed interest and annuity rates of major insurers to Age 86. The type of life insurance policies used will be determined by the trustee. Trustee fiduciary concerns require a continual monitoring of plan costs and benefits. Conservatively, it is anticipated that benefits for classifications that are considered to have a more transient plan participant status (e.g. seven years of employment or less) would normally be funded with conventional or group term life insurance. Conversely, benefits for classifications more permanent in nature are normally funded by life insurance policies that are both time sensitive and financially manageable. The plan contributions for this benefit will be equal to the required premiums and are deemed to constitute qualified direct costs, as defined in IRC §419(c)(1).
