Sherwin-Williams Employees:Life Insurance in Estate Planning

Healthcare Provider Update: Healthcare Provider for Sherwin-Williams Sherwin-Williams provides its employees with access to comprehensive healthcare benefits through employer-sponsored health plans, which include medical, dental, and vision coverage. These plans are designed to meet the diverse needs of their workforce and are typically updated annually during the open enrollment period each October and November. Potential Healthcare Cost Increases for Sherwin-Williams in 2026 As healthcare costs continue to rise, Sherwin-Williams may face significant increases in insurances premiums for 2026. Due to anticipated record hikes in Affordable Care Act (ACA) marketplace plans, some employees could see their healthcare expenses surge by over 75% if enhanced federal premium subsidies are not extended. This situation is compounded by rising medical costs, with overall healthcare costs expected to increase by approximately 8.5% for employers, meaning that Sherwin-Williams will likely need to navigate these challenges while managing employee healthcare benefits responsibly. As a proactive measure, employees might consider optimizing their healthcare choices in 2025 to mitigate potential financial impacts in the coming year. Click here to learn more

Life insurance gives Sherwin-Williams employees liquidity for estate planning without having to liquidate assets, says Wesley Boudreaux of the Retirement Group, a division of Wealth Enhancement Group. I suggest being proactive in evaluating group and individual policies to determine which best meets their long-term financial goals.

For Sherwin-Williams employees seeking estate liquidity, knowing the different types of life insurance policies and their benefits is important, says Patrick Ray of the Retirement Group, a division of Wealth Enhancement Group. A good policy will provide for immediate financial needs as well as business operations, allowing families and businesses to transition more easily.

In this article, we will discuss:

1 Life Insurance Basics: Understanding life insurance - the types and their uses in financial and estate planning.

2. The Importance of Estate Liquidity: How life insurance can provide liquidity for estate taxes and expenses so assets can be kept instead of sold to satisfy financial need.

3. Strategic Use of Life Insurance: How to use life insurance in estate planning to reduce taxes and increase financial security for beneficiaries.

What Is Life Insurance?

We get many inquiries from Sherwin-Williams customers about life insurance over the years. In a liquidity insurance or clean-up fund contract, one party (the insured and/or proprietor) pays premiums to another party (the insurer) for a set period of time. In return, the insurer pays a specified amount to the insured's estate or to a third party, the beneficiary, in the event of death or other covered event. Life insurance serves many different estate planning purposes, but its main benefit is liquidity for the estate.

Liquidity means that the estate can pay possible taxes and other costs in cash or cash alternatives. Your illiquid assets may include real estate and business interests that your estate will have to sell when they mature if they are most of them. This might leave you broke and/or force your loved ones to sell assets you wanted them to keep.

Therefore, liquidity planning should be among your top estate planning objectives. If you anticipated the liquidity needs of your estate with life insurance, the funds will be there when they are needed. Ask four questions about life insurance: (3) Who should be the proprietor and recipients? (4) Can you meet your other insurance policy objectives while keeping the proceeds out of your estate?

Is It Life Insurance?

The Internal Revenue Code defines death benefits as:

Benefits under standard life insurance policies. Endowment policy death benefits paid when the insured dies before the contract matures. Death results from communal existence. Life Insurance Benefits - National Service or U.S. Government Life Insurance Benefits. Paid up and term additions bought with paid dividends on a policy. Proceeds payable under double indemnity provision. Benefits payable through an accident/accident and health insurance policy.

How Does Life Insurance Provide Estate Liquidity?

You Finish Arrangements Before Death.

The owner or insured does all the time consuming tasks in advance. Before you die, you contact your insurance agent, decide, sign paperwork, have the medical exam if necessary and pay the premiums. Your family will not have to deal with excessive bureaucracy after your death - that is trauma enough for them.

Proceeds Available Immediately on Death (or Soon After)

Insurance policy proceeds are paid out immediately or shortly after the insured dies. Probate can take months - insurance proceeds are circumvented. So estate bills are paid on time and your family has money to live on. It means business owners have enough money to continue business as usual.

Just how much do you need?

We suggest our Sherwin-Williams clients first calculate how much life insurance they need to purchase to meet estate liquidity requirements. Consider your estate's immediate cash needs at death (to pay off bills you owe and costs associated with your death) and your family's long-term need for funds to pay for daily living and other special obligations.

Group or Individual?

Group Life is an Employment Benefit.

Recent growth has been in group life insurance - an employee benefit offered by the employer. Usually, the employer pays the premium. But sometimes the employee pays a portion. The beneficiary can be anyone the employee designates. This is done primarily to help the employee's family. If Sherwin-Williams provides this benefit, weigh the tax implications before you take advantage of it or buy an individual policy instead.

Proceeds Might Be Included in Employee's Estate for Estate Tax Purposes.

The proceeds from a group life insurance policy may be included in your estate - depending on the year you die - for estate tax purposes. You can remove the proceeds from your estate by assigning absolute title to all 'incidents of ownership' of the policy so long as you do not name your estate or personal representative as the policy's beneficiary directly or indirectly. But Sherwin-Williams clients should know that this assignment must occur three years before death for the proceeds to be removed from the estate.

Which Insurance Policy Should You Get?

Normal level -- Sherwin-Williams customers will first hear about the standard level. Ordinary level whole life insurance has level premiums - the amount you pay will not increase over time. Your premium payment is based on the assumption that premiums will be paid for the rest of your life. But in most cases, the policy dividends can be used to repay the premiums faster. Ordinary level whole life can be called continuous premium whole life.

Limited compensation -- Now we want Sherwin-Williams customers to understand limited-pay. Whole life insurance with a low payout is called limited-pay whole life insurance. So the policy contains tax-deferred cash values and a predetermined mortality benefit. It provides the same benefits as any other whole-life insurance policy but the premium payment period is shorter. The number of annual payments (7, 10, 20, or 30) or the age at which the policy is paid up (60, 65, or 70) is used to identify the policy.

Single premium - We want to make sure our Sherwin-Williams clients understand single premium policies. Like its name suggests, a single premium policy is a limited-pay policy that requires a lump-sum premium payment. Single premium whole life insurance is a lot of money spent on a single policy, and it is based on the assumption that there will be no return on any portion if an early death occurs, so it has limited appeal.

Adjustable life - That's the first variation we want Sherwin-Williams customers to understand. A variable premium whole-life insurance policy is called adjustable life. The policy provides the same mortality benefit and cash value guarantees as a conventional whole-life policy. Unique to the adjustable life policy is the ability to request premium or death benefit (face amount) or cash value adjustment at specified intervals. Increases in the death benefit above some percentage or dollar amount usually require medical proof of insurability.

Current Whole Life Assumption -- Next up for our Sherwin-Williams clients is current lifetime assumption. Actual whole life is a variation on traditional whole life that lies somewhere between adjustable and universal life. A redetermination feature changes the premium amount and mortality benefit based on the latest experience or time period. Current assumption whole life insurance is appropriate for those who desire the discipline of a fixed-premium design but want positive investment returns beyond the guaranteed interest rate of the policy.

Other Types

Endowment life -- An endowment life policy pays death benefits and accrues cash values with policy duration so that the cash value at maturity equals the death benefit. And the buyer may specify maturity date. All survivors benefits are payable at a predetermined age or time. During the accumulation period, it also provides a mortality benefit equivalent to the target accumulation amount. As cash value cannot be accumulated tax-free in a flexible premium endowment policy, sales are usually limited.

A variable life policy has no interest rate or minimum value guarantee. The policyholder has a limited number of investment portfolio options whose mortality benefits depend on investment performance. The sales load, mortality charges, and surrender charges of variable life insurance are not suitable for short-term investments as they reduce early gains significantly.

Caution: Want our Sherwin-Williams clients to know that variable life insurance policies are offered by prospectus - get it from your financial professional or from the insurance company issuing the policy. The prospectus explains investment objectives, risks, charges, and expenses. This is information these Sherwin-Williams employees should read before buying a variable life insurance policy.

Premium flexibility includes extra premium payments, omitted premium payments, and premiums below the target amount. All payments must equal the cost of maintenance of the policy. Prefunding is determined by the policy owner. Policyholders select between a level death benefit and an increasing death benefit and can withdraw partial withdrawals from the cash value without incurring debt. With an increasing benefit, the total mortality benefit increases with increasing cash value. For higher premiums, payment is either the face value or cash value.

Joint first to die:

coverage for two or more and death benefit on first demise through joint first to die. Coverage may be term, universal, variable, or permanent. Business partners usually use joint first to die to include each partner's life. The surviving partners receive funds to buy the partnership interest of the deceased partner upon the death of the first partner.

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This combined second to die or survivorship policy covers two or more lives under one contract.The benefit is paid on the second passing. Coverage may be term, universal, variable, or permanent.Who Should Be The Owner And Beneficiaries (Or How Do You Keep The Proceeds Out of Your Estate For Federal Gift And Estate Tax Purposes)?

Fonds Used For Taxes Never Reach Your Beneficiaries.

Why understand gift and estate tax implications of life insurance? Because the money used to pay taxes is not distributed to your beneficiaries - your estate may be subject to state death taxes. It is often best to avoid future taxation on your dollar. Proceeds Are Usually Subject to Federal Gift and Estate Tax.

Your life insurance may be included in your gross estate for federal gift and estate tax purposes if: 1) The funds belong to or are derived from your estate; (2) You own the policy when you died or any time during the three years preceding your death; or (3) you sold a policy within three years of your death; and (4) estate taxes are levied in the year of your death. Any life insurance you own on the life of another person at the time of your death may also be taxable as part of your gross estate.

So to avoid federal gift and estate tax, we tell these Sherwin-Williams clients:

Make all proceeds payable to your estate. Make payments to your executor or personal representative. Ownership of the policy or any component of it. Three years after your death, transfer an existing policy to a new owner (need a crystal ball). Send the proceeds to someone else to pay off a debt. Pay all the proceeds to a beneficiary under an agreement in which the beneficiary is to pay death taxes or other debts or expenses of the estate. Send the proceeds to the beneficiary for alimony or child support payment.

How About Income Taxes?

Proceeds Are Exempt From Income Taxes.

Exceptions aside, proceeds are generally exempt from income taxes and are included in the beneficiary's gross income. Only interest paid by the insurer on proceeds retained after your death is taxable to your beneficiaries unless there has been a transfer for value of the policy. We therefore urge these Sherwin-Williams employees not to fret about income taxes draining the insurance pots too much.

Transfer-For-Value Rule

The proceeds of selling a life insurance policy are taxed as ordinary income to the new owner minus the amount invested in the contract by the new owner. The following situations are excluded from this rule:

Transfers to an associate Transfers to a partnership (in which you own a stake): Transfers to a corporation where you are a shareholder or officer are deductible. Transfers with base added on.

Technical Note: This is because the transferee takes a carryover basis from you, which is called the tacked-basis exception. It happens often with gift property.

Added Fact:

Life insurance can make your estate planning more advantageous for wealth transfer, research shows. One possible strategy that may benefit our Sherwin-Williams clients is an irrevocable life insurance trust (ILIT). Placing life insurance policies in an ILIT may exclude the policy proceeds from the insured's taxable estate and reduce estate taxes. Additionally, an ILIT gives more control and protection of the policy so the intended beneficiaries get the money they need. So wealth can be efficiently transferred to future generations while minimizing tax liabilities. Source: Irrevocable Life Insurance Trusts, 'The Balance, 10 March 2023.

Added Analogy:

Life insurance in estate planning is a safety net for your loved ones' financial future. Like the tightrope walker who depends on the safety net below to catch him if he trips, life insurance is a financial safety net for your beneficiaries. And it cushions the blow - so if the worst should happen, your loved ones will be covered and your money will be enough. Like a safety net that is planned and positioned for maximum protection, life insurance in estate planning requires careful consideration and strategic decision making to fit your estate goals. Just as a tightrope walker puts their safety in the net, life insurance in estate planning can give you peace of mind that your family's financial future is secure.

Sources:

1. University of Minnesota Extension :'Uses of Life Insurance in Estate Planning.'  University of Minnesota Extension , extension.umn.edu. Accessed 23 Feb. 2025.  Link

2. Michigan State University Extension :'Types of Life Insurance.'  Michigan State University Extension ,  www.canr.msu.edu . Accessed 23 Feb. 2025.  Link

3. Ohio State University Extension :'Basic Estate Planning: Life Insurance.'  Ohioline , Ohio State University Extension, ohioline.osu.edu. Accessed 23 Feb. 2025.  Link

4. University of Cincinnati :Hopperton, Kevin T., and John A. O’Brien. 'Life Insurance for Effective Estate Tax Planning.'  University of Cincinnati , 10 Dec. 2020,  www.uc.edu . Accessed 23 Feb. 2025.  Link

5. St. Mary's University, School of Law :Lytton, Lee. '‘Save the Land from Uncle Sam’: Using Life Insurance Premium Financing in Estate Planning.'  Estate Planning and Community Property Law Journal , vol. 2, no. 2, 2010, p. 421.  St. Mary's University School of Law , commons.stmarytx.edu. Accessed 23 Feb. 2025.  Link