Life insurance inside your 401(k)

Buy term coverage with pre-tax dollars, at unisex rates, with an employer match where the plan offers one. In our example, $1,000,000 of term costs $596 instead of $1,429 of pay.

Run your numbers Read Part I (PDF)

How it works

The same coverage, paid with pre-tax dollars

Qualified Life lets employees buy term or permanent coverage with pre-tax dollars, at unisex rates, with an employer match where the plan offers one.

Cost of the same coverage (example)

$1,429

$596

Pre-tax pay, bought on your ownNet cost through the plan

Example only; your plan must permit life insurance.

$833

saved on the same $1,000 term premium in our example

Up to 10%

savings from unisex rates (varies)

Download Part I: Life Insurance Inside Your 401(k) (PDF)For employers: set up Qualified Life

Two examples

What it saves, and what the savings can do

Part I

Example 1: The Death Benefit

Bought on your own, $1,000,000 of term coverage priced at $1,000 a year takes about $1,429 of pre-tax pay. Through your 401(k), with pre-tax premiums, unisex rates and an employer match, your net cost is about $596. That's $833 saved in year one.

Download Part I: Life Insurance Inside Your 401(k)Flow Chart: see it step by step (PDF) →

Part II

Example 2: The Redirect

Keep spending the $1,429 that retail term would cost. The savings land in your paycheck, $583 after tax, and $400 of it buys a Guaranteed Plan Contribution: if you become disabled, the carrier pays $7,500 a year into your 401(k) until 65. Disabled at 50, that protects $185,044 of retirement savings. The rest builds a small savings account that covers the premium to 65, and your life coverage stays funded, at no additional cash outlay.

Download Part II: The Redirect Flow Chart: see it step by step (PDF) →

Check the math:Part III: The Math Behind Qualified Life (PDF)What $1,000 a Year Is Really Worth (Advanced Group)

Go deeper · Part IVThe Four Moving PartsWhy Qualified Life starts with term, two ways to use the savings, and how moving two of a policy's four roles changes what coverage costs.Read Part IV (PDF) →Why we use 5%The AIB Whole Life Index155 years of whole life dividend history, the four-carrier index from 2001 to 2026, and actual 30-year policy results.Read the Index (PDF) →

Hypothetical examples. Assumes a 30% tax rate, 10% unisex savings, an employer match of 100% of the first 3% and carrier REB rates. Savings grow at a hypothetical 5%; the disability example assumes a $7,500 annual 401(k) contribution growing at 6% and a $400 DI premium paid after tax. Your plan, premiums and results will differ. Advanced Insurance Brokerage does not provide tax or legal advice.

Calculator

Run your own numbers: the Term Premium Tax Calculator

Enter your term premium and tax rate to compare paying it after tax with paying it through a traditional 401(k). Turn on the employer match, unisex rates and the REB tax to reach Example 1. Flow Chart: how the calculator works (PDF) → Open full screen

The Qualified Life series

Every guide and flow chart in one place

Part ILife Insurance Inside Your 401(k)The death benefit: $1,000,000 of term for a $596 net cost instead of $1,429 of pay.Read Part I (PDF) →Part IIThe RedirectKeep the $1,429 budget; the savings buy disability coverage that keeps funding your 401(k).Read Part II (PDF) →Part IIIThe Math Behind Qualified LifeEvery dollar itemized, results with no employer match, and a worksheet.Read Part III (PDF) →Part IVThe Four Moving PartsWhy Qualified Life starts with term, two ways to use the savings, and moving two of a policy's four roles.Read Part IV (PDF) →Flow chart · Part IHow the savings grow in your 401(k)Qualified Life only, step by step: $833 a year into your 401(k).See the flow (PDF) →Flow chart · Part IIThe Redirect, step by stepTerm plus Contribution DI from the same budget.See the flow (PDF) →Flow chart · CalculatorHow the calculator worksFrom $1,429 after tax to $596 through the plan, one step at a time.See the flow (PDF) →

For employers and advisors

Add Qualified Life to the plan you already have

EmployersSet up Qualified LifeHow it works with your plan, your TPA and your payroll.Employers page →Road mapThe employer road mapSix steps from plan review to enrollment, with no new payroll cost.Read the road map (PDF) →ReviewEmployer benefits reviewStart with a review of the benefits you offer today.Request a review →AdvisorsPartner case studyHow an advisor adds Qualified Life for a plan sponsor client.Read the case study (PDF) →

Want Qualified Life at work?

Tell us about your plan and coverage. Your plan must permit life insurance; we will check with your employer and plan administrator.

Ask about Qualified Life