Carve-Out plans, including Life, Disability, and Long-Term Care, are widely implemented by some of the largest U.S. Corporations and Professional Practices. A Carve-Out is life insurance comprised of three components:
First, the framework is built on individual life insurance contracts. The plan provides high guaranteed issue or simplified issue benefits, and they are portable! As a pure alternative
to group term insurance, a Carve-Out plan can often supplement or replace existing group life insurance coverage at a favorable cost.
Second, the plan provides opportunities for optional post retirement death benefits. Through either enhanced individual or entity-based funding, strategies to efficiently address
post-retirement life insurance needs can be chosen.
Third, the contract could further serve as an optional supplemental accumulation vehicle. The Carve-Out plan can become a particularly effective enhancement to the firm’s existing
retirement plans. It also offers the participant the potential for tax free accumulation and withdrawals. This might help provide a hedge against higher future income tax rates. Additionally,
in most states the accumulation value of life insurance is not subject to claims of creditors.