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Understanding Term Life Insurance Options for Graybar Electric Employees: A Guide to Navigating Your Coverage Choices

What Is It?

Temporary, Pure Insurance

If you are a Graybar Electric employee seeking insurance alternatives, you may benefit from purchasing term life insurance. Term life insurance provides life insurance coverage for a specific time period (term). It is often referred to as temporary insurance or pure insurance, in that there is no cash value in the policy. The face amount of the policy is paid if you die during the term of the policy. As a Graybar Electric employee, it is important to note that for this type of insurance, nothing is paid when you live longer than the coverage term.

Caution: Any guarantees associated with payment of death benefits, income options, or rates of return are based on the claims-paying ability of the insurer. Policy loans and withdrawals will reduce the policy's cash value and death benefit.

When Can It Be Used?

High Insurance Need, Low Cash Flow

For Graybar Electric employees, term insurance is appropriate when there is a high need for insurance but not much cash flow to pay for it. For example, a young family with limited cash resources may have a great need for survivor income to provide for living expenses and education needs. Term insurance is especially helpful here, allowing the family to buy insurance protection with minimal cash outlay.

Short-Term Coverage

Term insurance is well suited to cover short-term needs, such as coverage during your working years, the college years, or for the duration of a loan or mortgage. Generally, a short-term need is considered to last 10 years or less and may include coverage for nonrecurring business-debt security, key person coverage in a start-up business, or the young family just starting out. As a Graybar Electric employee it is important to account for this information when in need of coverage or when planning your short-term financial strategies.

Strengths

Low Cost for Large Death Benefit (At Least In Younger Years of Life)

For Graybar Electric employees, term insurance is generally the most efficient way to achieve maximum life insurance protection for a minimum current cash outlay. When you are young and just beginning your career or family, you may have a need for insurance but not much cash to pay for it. You can usually buy a larger death benefit for less cash with a term policy than you could get with any other type of life insurance policy.

Caution: Term insurance starts out inexpensive when you are young, but the premiums generally increase at each renewal.

Flexible--You Can Buy Policy Based on Various Time Frames And Features

You can buy term insurance coverage for the time period that best suits your needs. Generally, Graybar Electric employees can increase their coverage when their needs change, and renew the policy for an additional period. Increases in coverage may require new proof of insurability.

Policy Type	Feature	Drawback
Annual Renewable Term Coverage for one-year time frame	Policy automatically renewable each year up to specified age	May have limit on number of renewals Premiums may increase with each renewal
Renewable Term Coverage is for a specific period, usually 5 to 20 years	Policy automatically renewable through end of term with no new application or medical exam, even if health has deteriorated	Renewable for same amount of coverage or same term may not be available. Premiums increase with each renewal
Level Premium Term Coverage is for a specific period, usually 5 to 20 years or until a predetermined age	Premium guaranteed to remain same for policy term	Premiums may increase sharply at end of term when new policy must be applied for
Decreasing Term Used to cover mortgage or other debt where balance decreases over time	Premiums remain level, but death benefit decreases each year over term	General insurance needs tend to increase over time due to inflation
Convertible Term	Allows you to convert term policy to another type of policy offered by issuing company	Premiums usually cost more than annual renewable term

Tradeoffs

Premiums Increase At Each Renewal And Get More Expensive With Age

As a Graybar Electric employee, you may want to consider how a term policy has an endpoint, like an expiration date. When the coverage period ends, you may have the option to renew the policy depending on specific policy and limitations. Each time you renew the policy for an additional term of coverage, the rate generally increases because your age (and consequently the insurance company's risk of paying the death benefit) has increased. Eventually, you could be paying more in premiums for term coverage than if you had bought a whole life policy from the beginning. For fortune 500 employees, the increasing premium costs can make term insurance expensive when conducting financial planning for the long-term.

You can start with convertible term insurance in the early years of your career, marriage, or family. When cash is a little less scarce, convert to permanent life insurance such as whole life, universal, variable, or variable universal.

Most Policies Automatically Terminate At Certain Age

Most term policies automatically terminate at a certain age, often 65 or 70, and most people will outlive the term of the insurance. As a Graybar Electric employee, you may want to keep in mind that term policies pay a benefit only when you die during the coverage period. When you live longer than the term of the insurance, your beneficiary receives nothing. There are policies available that are renewable until age 90 or 95. For fortune 500 employees, applying this information is imperative in order to obtain the best coverage option and avoid being left shorthanded.

Some policies also offer a return of premium feature whereby the premiums you paid are returned at the end of the policy term, presuming the death benefit hasn't been paid. If you are a Graybar Electric employee and want a policy where you can be covered for your entire life, consider one of the permanent cash value policies such as whole life, variable life, universal life, or variable universal life.

How to Do It

Determine Your Life Insurance Need And Overall Financial Goals

As a Graybar Electric employee, you need to know how much insurance you need prior to purchasing the policy. Insurance need is based on numerous factors, including your current age and income, marital status, number of incomes in the household, number of dependents, long-term financial goals, level of outstanding debt, and existing insurance and other assets. For fortune 500 employees, your overall financial, estate, and tax-planning goals should be considered as part of your insurance need evaluation.

Tip: Consult with your financial advisor concerning your need for insurance. Some of the calculations can be complicated.

Complete The Insurance Application And Name Your Beneficiary

Before the insurance company can issue your policy, it must receive a completed application form. For Graybar Electric employees, the application includes general health questions, and the process may include a physical examination, which is usually paid for by the insurance company. A critical part of the application is the beneficiary designation--the naming of the person or persons to receive the policy proceeds when you die. Unless you make an irrevocable beneficiary designation, you can change the beneficiary designation by adding or removing a beneficiary or by changing the percentages of the proceeds distribution.

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Buy The Policy And Pay Your Premium

It is all well and good to know how much insurance and what type of policy is appropriate for your particular situation, but if you don't actually buy the policy, you haven't accomplished your goal! In addition to that, Graybar Electric employees must account for how insurance becomes more expensive with age, meaning delays in policy purchase usually result in unnecessary spending. An additional risk of delaying is that your health could change adversely.

As a Graybar Electric employee, just because you are healthy and insurable today doesn't mean you will be that way later. Deterioration in your health can mean higher premiums or an insurer considering you to be uninsurable.

Review Your Insurance Need Periodically

The amount of life insurance you need may change over time and with the occurrence of lifetime events. Those employed in Graybar Electric companies should periodically review their life insurance coverage. As a rule, you should review your coverage every three years. Major lifetime events (such as the purchase of a home, birth or adoption of a child, marriage, or divorce) are also appropriate times to review your coverage. By routinely checking your insurance need, you can prevent the mistake you can't fix after you die: not having enough life insurance.

Tax Considerations for Graybar Electric Employees

Income Tax

Premium Payments Not Deductible

Life insurance premium payments are generally not tax-deductible expenses.

Death Benefits Generally Not Subject To Federal Income Tax

Policy death benefits are generally not subject to federal income tax. One notable exception is when the policy has been sold or otherwise transferred for valuable consideration by one policyowner to another, subjecting it to the transfer-for-value rule.

Gift And Estate Tax

Policy Proceeds Not Considered Gift to Beneficiary

When the proceeds of your life insurance policy are paid to a beneficiary, they are not treated as a gift for gift tax purposes.

Policy Premium Payments Generally Not Subject to Gift Tax

When you are the owner of a policy on your own life, with another party as the beneficiary, premium payments made by you are not considered a gift to the beneficiary for gift tax purposes. If, however, someone else pays the premiums on a policy you own, of if you pay the premiums on a policy owned by another, the premium payments are considered a gift and may be subject to gift tax. For Graybar Electric employees, policy premiums generally qualify for the annual gift tax exclusion.

Policy Proceeds Included In Estate Value In Some Cases

For Graybar Electric employees, the proceeds of a life insurance policy are included in the value of your estate if you held any incidents of ownership at any time during the three years before your death, or if the proceeds are payable to you or your estate or executor. Incidents of ownership include (among other things) the right to change the beneficiary, take out policy loans, or surrender the policy for cash.

Policy Proceeds Often Exempt From State Inheritance Tax

In many states, life insurance proceeds are exempt from state inheritance taxes.

Questions & Answers for Graybar Electric Employees

If You Are Covered Under a Group Life Insurance Policy Through Your Employer, Do You Still Need A Personal Policy?

As a Graybar Electric employee, you should have your own policy outside the group coverage provided by your employer. The policy through your current employer is more than likely not portable--meaning that when you leave the company, your life insurance coverage will not go with you. It is very common for those in Graybar Electric to change jobs numerous times during their career. Even if you plan to stay with your current job until retirement (assuming your job exists that long), what will you have for coverage afterward? The best way to make sure your family is provided for when you die is to have your own insurance coverage in addition to any provided by your employer. While conversion coverage may be available, it may be expensive and it may offer limited coverage. In addition, it may not meet all of your coverage needs.

Can Your Spouse Own a Policy on Your Life And Name Your Child As Beneficiary?

This can be done, but it shouldn't be. When the insured, the policyowner, and the beneficiary are three different parties (sometimes referred to as the 'unholy trinity' or the 'Bermuda triangle'), the death benefit is subject to gift tax.

Can You Name Your Spouse As The Beneficiary on Your Life Insurance Policy If He or She Is Not A U.S. Citizen?

You can, but there could be estate tax consequences. When your spouse isn't a U.S. citizen and is the beneficiary on your life insurance policy, the death benefit isn't protected by the unlimited marital deduction.

Should You Buy Life Insurance on Your Children?

In some instances it is advisable for those in Graybar Electric companies to buy life insurance on their children, but it shouldn't be done until the appropriate levels of coverage are in place on the lives of the family breadwinner(s), and a spouse is engaged in caring for the children.

Should You Buy Term Insurance or Cash Value Life Insurance?

It depends upon your personal circumstances as a Graybar Electric employee. The first issue to resolve is not what type, but how much life insurance you should buy, and how long your coverage is needed. Once you can answer the quantifiable insurance question, you can move on to the financial aspect. It is possible that the amount of coverage you need as a Graybar Electric employee is so large that the only affordable way to get the coverage is with lower-premium term insurance. If you can afford the needed coverage with either type of policy, then you should think about the financial aspect of which type of policy to buy, considering such factors as your tax bracket and the rate of return you could receive on alternative, similar risk investments.

Is Mortgage Protection Term Insurance Different From Term Life Insurance?

Yes. With mortgage protection term insurance, the policy is designed so that the coverage decreases over time to match the reduction in the amount of the mortgage loan. The premiums, however, remain the same throughout the payment period, which tends to be shorter than the actual coverage period. Level term life insurance policies provide a consistent coverage amount.

Should You Buy Term Insurance And Invest The Difference?

While it sounds good in theory, most people who opt for a lower-premium term policy with the intention of investing the difference between that and a higher premium cash value policy never actually make the investment! First, you must establish that term or temporary life insurance is the best option for you. If you also need to create or continue a savings program for future use, such as retirement or college education expenses, try committing a certain amount to savings in addition to paying life insurance premiums. For Graybar Electric employees, an alternative might be to set up an automatic transfer with the bank, where a fixed amount each month is directed into a savings account or plan. Another alternative might be to buy the cash value policy and take advantage of the forced savings built into the premiums for a cash value policy.

Should You 'Invest' In Insurance?

As a Graybar Electric employee, it generally isn't a good idea to buy insurance unless you need it. If you want to invest money, many options are available. When you need insurance, there are policy types available that can serve the dual purpose of insurance protection and cash value investments. The bottom line is, don't buy insurance because you are looking for an investment--buy insurance because you need the protection.

What steps must an employee take to ensure they accurately calculate their pension benefits when planning for retirement under the Electricians Pension Plan, IBEW 995? Employees need to understand the various factors that contribute to benefit calculations, including years of service credits, age, and any early retirement reductions. Participants should also familiarize themselves with the formulas outlined in the plan regarding Normal Retirement and Early Retirement benefits.

Employees under the Electricians Pension Plan, IBEW 995 can ensure accurate pension calculations by reviewing the plan's formulas, which consider factors like service credits, age, and early retirement reductions. The plan provides specific calculation methods for Normal and Early Retirement pensions, so employees should refer to their accrued credits and apply the appropriate formula based on the years of service to get a precise benefit estimate(Electricians_Pension_Pl…).

How does the Electricians Pension Plan, IBEW 995, treat periods of active service compared to breaks in service when determining eligibility for pension benefits? Employees should be aware that their length of service is critical to establishing eligibility, and any periods identified as breaks in service may impact their pension status. Understanding the definition and implications of breaks in service can be vital for maximizing retirement benefits.

Service periods under the Electricians Pension Plan, IBEW 995 are critical for pension eligibility and accrual. Breaks in service, defined as periods where an employee is not credited with at least 250 hours in a plan year, can disrupt benefit accrual and participation. However, the plan provides grace periods for specific situations such as disability or maternity, preventing these gaps from affecting eligibility(Electricians_Pension_Pl…).

What are the implications of returning to work after starting to receive benefits under the Electricians Pension Plan, IBEW 995, and how can it affect ongoing pension payments? It's important for employees to recognize the conditions classified as "Disqualifying Employment" that can lead to suspending their pension benefits. Knowing how working while receiving benefits influences the plan can help retirees make informed decisions about their post-retirement employment.

Returning to work after starting to receive benefits under the Electricians Pension Plan, IBEW 995 can result in a suspension of benefits if the work qualifies as "Disqualifying Employment." Employees should check the plan’s definitions to see if their employment will affect their pension payments. Generally, working over 40 hours per month in covered employment or similar trades can trigger a suspension(Electricians_Pension_Pl…).

In what ways can an employee's spousal status influence the benefits they receive from the Electricians Pension Plan, IBEW 995? Employees need to understand how their marital status affects pension distributions, including survivor benefits and waivers. This knowledge is crucial for planning, as certain benefit structures depend significantly on whether the participant has a qualified spouse.

Spousal status significantly affects the distribution of benefits under the Electricians Pension Plan, IBEW 995. If an employee is married, the default pension option is the Joint and Survivor Annuity, which provides a continued payout to the spouse upon the participant’s death. The plan also outlines the necessary waivers and consents required for changing these benefits based on marital status(Electricians_Pension_Pl…).

How do changes in the Internal Revenue Service (IRS) regulations affect the contribution limits and benefit payouts related to the Electricians Pension Plan, IBEW 995? Employees should keep informed on the most current IRS guidelines, as they directly influence how benefits are calculated and dispersed. Awareness of IRS limits can prevent unexpected tax penalties and ensure compliance with pension law.

IRS regulations play an important role in determining contribution limits and payout structures under the Electricians Pension Plan, IBEW 995. Changes to IRS rules may affect the maximum allowable benefits and tax treatments. Employees should keep up to date with IRS guidelines to avoid potential tax penalties and ensure their pension plan remains in compliance(Electricians_Pension_Pl…).

What documentation is required for employees to maintain their eligibility for pension benefits under the Electricians Pension Plan, IBEW 995, especially after significant life events such as marriage, divorce, or disability? Employees must notify the plan office of life changes and provide necessary documentation. Understanding what these documents are and how they should be submitted is crucial for maintaining eligibility and accessing benefits.

Significant life events such as marriage, divorce, or disability require timely submission of documentation to the Electricians Pension Plan, IBEW 995 to maintain eligibility. This may include marriage certificates, divorce decrees, or proof of disability. Employees should contact the plan office to ensure all required paperwork is properly submitted to avoid interruptions in benefits(Electricians_Pension_Pl…).

What processes are in place for employees to appeal a denial of benefits under the Electricians Pension Plan, IBEW 995, and what timelines must they adhere to? Employees should be aware of their rights under ERISA concerning claims and appeals, including the time limits for submitting appeals. This knowledge ensures they are equipped to address any potential issues they may encounter during the pension claim process.

If a claim for benefits is denied, the Electricians Pension Plan, IBEW 995 provides an appeals process. Employees must file a written appeal within 60 days of receiving the denial notice. The appeal should include any relevant documentation, and employees should follow the timeline and procedures outlined in the plan to ensure proper consideration of their case(Electricians_Pension_Pl…).

How can employees determine if their employer is meeting its financial obligation to the Electricians Pension Plan, IBEW 995, particularly regarding contributions? Understanding the mechanisms for verifying employer contributions can help employees ensure that they are accruing the appropriate benefits. Employees should know whom to contact and what reports they can access to gather this information.

Employees concerned about their employer meeting its contribution obligations to the Electricians Pension Plan, IBEW 995 can contact the plan’s administrative office for verification. The plan allows participants to access contribution reports to confirm that employers are properly crediting their accounts(Electricians_Pension_Pl…).

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The Electricians Pension Plan, IBEW 995 offers various resources to help employees understand their retirement options. These include the plan’s summary description, workshops, and individual consultations with plan administrators. Employees should make use of these tools to gain a clear understanding of their pension and plan effectively(Electricians_Pension_Pl…).

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For additional questions or clarification regarding the Electricians Pension Plan, IBEW 995, employees can contact the plan's administrative office at the provided phone number or address. The office offers support for all queries related to pension benefits, eligibility, and documentation(Electricians_Pension_Pl…).