Advanced Underwriting Consultants

Question of the Day – January 30

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question:  My business owner client wants to offer life insurance in the company’s pension plan for participants.  Must the life insurance plan offer non-sex-distinct (i.e. – unisex) rates?

Answer:  Many life insurance companies in this market believe that the answer is yes.

In 1983, the United  States Supreme Court ruled that employers who offer  retirement annuity plans that pay smaller monthly benefits to women than  to  similarly  situated men violate the ban against sex discrimination in employment in Title VII  of the Civil Rights Act of 1964.  This case is often referred to as the Norris decision.

Companies involved in the administration of pension plans, including insurance companies, interpreted the result as requiring the use of non-sex-distinct annuities in conjunction with pension plans.  Many of the same companies decided that if unisex were required with regard to annuities, the decision would probably also require unisex with regard to life insurance.

Even though the Norris decision is nearly 30 years old, there have been no substantial subsequent court cases or regulations to clarify its scope with regard to pension-owned life insurance.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.