Defined Benefit Plan
A qualified retirement plan promising a specified benefit at retirement based on salary and service, funded by employer contributions actuarially, favoring long-service older owners.
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Life insurance protection provided inside a qualified retirement plan:
Is permitted only to an incidental degree and is subject to strict limitations — Qualified retirement plans may include life insurance only as an incidental benefit, because the plan's primary purpose must be retirement savings. Incidental limits apply, such as a death benefit generally limited to 100 times the projected monthly pension benefit in a defined benefit plan, or a limited percentage of the account balance in defined contribution plans. Life insurance inside a plan also creates taxable term cost to the participant. The limits ensure that the death benefit does not dominate the retirement purpose of the plan. This is a rare and highly restricted use of life insurance.
National insurance concept
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