Insurance benefits versus death benefits

Insurance benefits versus death benefits information for Family Adjustment, Family Income and Contributory Group Life Insurance Plans

For Family Adjustment and Family Income Coverage, you may choose between an insurance benefit and a death benefit. While there are differences between insurance benefits and death benefits, the amount of your coverage is identical. Unless you choose the death benefit option, you are automatically enrolled in the life insurance option.

You may change from one to the other at any time. You may also elect an insurance benefit for one coverage and the death benefit for the other coverage.  For example, you can elect an insurance benefit for Family Adjustment and the death benefit for Family Income Coverage.  A change from life insurance to a death benefit will be effective the first of the month following the date your properly completed election form is received by the company. To change from the death benefit option to the life insurance option, you must provide evidence of good health. Your change will be effective the first of the month following the date the company receives confirmation that the insurance company has received satisfactory evidence of good health.

Choosing between life insurance and a death benefit

Life Insurance

Generally, life insurance proceeds are not subject to income tax.  When you die, such proceeds may be subject to federal estate taxes, but are not taxed as income except for the interest portion of the Family Income Insurance benefit.

To the extent that your employer-provided insurance coverage under the Family Income Insurance Plan and the Family Adjustment Insurance Plan exceeds $50,000, the cost of such coverage (computed in accordance with income tax regulations) constitutes income for federal income tax and wages for Social Security tax purposes. The IRS calls this imputed income. As you get older, the amount of imputed income generally increases.

ExxonMobil provides you with the amount of your imputed income on your pay statement and/or on your W-2 form. Social Security taxes, often referred to as FICA taxes, are required on imputed income for employees and for retirees who retired on or after January I, 1989.

If you worked for ExxonMobil during 1983, were employed by ExxonMobil on January 1, 1984, and were then age 55 or older, imputed income is no longer charged when you reach age 60 as a retiree.

Death Benefits

Instead of paying premiums to an insurance company, ExxonMobil agrees to pay your survivors from its own funds the same amount as under the insurance plan. Death benefit coverage provided under the Family Income Plan and the Family Adjustment Plan does not result in imputed income for federal tax purposes. Death benefits, however, are subject to income tax and may also be subject to estate taxes.  There are important differences between "insurance" plans and "death benefit" plans.