1
GROUP LIFE INSURANCE,
LIVING BENEFIT
AND
SPOUSAL LIFE INSURANCE
Effective April 1, 1999
Introduction
This brochure summarises the important information concerning Group Life Insurance coverage, including the Living Benefit provision, and Spousal Life Insurance and is referenced in the collective agreements with the Power Workers’ Union and with the Society of Professional and Administrative Employees
GROUP LIFE INSURANCE
Question: Who is eligible for Group Life Insurance?
Answer:
Probationary employees after 3 months service and all regular employees are covered under the Group Life Insurance Plan. Temporary, probationary (with less than 3 months of service), and contract staff are not eligible for coverage. The basic portion of the plan provides term insurance protection while employed or while on Long Term Disability (LTD).
Question: When does coverage begin?
Answer:
All employees are required to enroll in the plan when they are appointed to regular staff. Membership in the plan begins on the first day of the month following the date the employee is completes 3 months of probationary service or is granted regular status. If either of these requirements are met on the first day of the month, coverage begins from that day.
Question: What Insurance Options are available?
Answer:
For regular employees (excluding Executive staff), the plan provides for insurance of either two or three times the employee's base annual earnings, depending upon whether the employee elects Option I or II below. The premium for Option II will be paid by the employee through payroll deduction.
Additional
OptionBasic Term InsuranceTerm Insurance
(Paid by The Company)(Paid by Employee)
ITwo times base annual earningsNil
IITwo times base annual earningsOne times base
annual earnings
For "two times" coverage, base annual earnings are rounded upward to the next $500 and multiplied by two. For example:
Base Annual EarningsCoverage
1.$35,000.00 x 2 =$70,000.00 (no rounding up)
2.$35,000.01 x 2 =$70,000.02 rounded up to $70,500.00
For "one times" coverage, base annual earnings are rounded upward to the next $ 1,000.
Executive staff have basic life insurance equal to one time base annual earnings. They may use their flex dollars from Powerflex to purchase optional life insurance equal to one, or two, times base annual earnings. All group insurance amounts for Executives are rounded up to the next $1,000.
Question: Who pays for the insurance coverage?
Answer:
The premiums under Option I are paid by The Company. For employees who elect Option II, the premium for the additional term insurance is deducted monthly from their pay.
As of April 1, 1999, the taxable benefit rate for Option I became 22 cents per month per $1,000 of coverage.
The cost of the Additional Insurance (in Option II) remained at 14.0 cents per month per $1,000 of coverage, with an additional taxable benefit rate of 22 – 14 = 8 cents per month per $1,000 of coverage.
These amounts are reviewed annually.
Question: Are the insurance premiums taxable for employees?
Answer:
Yes. Under current tax laws, premiums paid by The Company for group term insurance is a taxable benefit. The taxable benefit is indicated on the employee's earnings statement once a month.
Question: How can I select, or change, my option?
Answer:
- An employee who becomes a member of the Plan will be deemed to have elected Option II. Employees may elect to be covered under Option I, within 90 days of becoming members in the plan, if they so wish.
- A member will be required to submit medical evidence of insurability to re-elect Option II.
- Employees may elect to change their option during the year. Any re-election shall become effective on the first of the month following the re-election or on the date of approval by the insurer of any required medical evidence of insurability which may be necessary in cases of increased coverage, whichever is later.
- When an employee changes his/her option, it cannot be changed again until 12 months have passed since the last change.
Question: What happens to my coverage if my salary/wages increase, or decrease?
Answer:
Changes in the employee's base earnings have the effect of increasing (or decreasing) coverage, the increase (or decrease) will be effective on the first day of the month coincident with or immediately following the increase, or decrease, in base earnings. The amount of coverage will be confirmed annually by means of the "Employee Benefits Information Report" which is sent to all employees.
Employees returning from LTD and/or on rehabilitation programs will not have their coverage decreased.
Question: What happens to my group life insurance when I retire?
Answer:
- Additional term insurance under Option II will terminate completely at age 65, or at normal or early retirement if earlier.
- Basic term insurance will be reduced to the following amounts:
Final base annual earnings rounded upward to the next $1,000 and divided by two for the first ten years of retirement; and
Final base annual earnings rounded upward to the next $1,000 and divided by four after the first ten years from retirement.
Pensioners are eligible for the conversion option which is explained in the following section.
Question: What happens if I leave The Company?
Answer:
Life Insurance coverage ceases 31 days after the end of the month in which employment is terminated. During the 31 days the individual is eligible for the conversion option set out below:
Conversion Option
Within 31 days after the month in which the employee terminates employment, or reaches age 65, or retires on an early or normal retirement date, he/she is eligible for the conversion option.
Pensioners who have been retired for 10 years are also eligible for this option if they apply within 31 days after the month in which their insurance is reduced.
The completed application form must be received by the Great-West Life Assurance Company the insurer) within the 31-day eligibility period.
The conversion option gives individuals the right to purchase from the insurer without medical examination, an individual policy in a form customarily issued at that time by the insurer, for an amount up to the amount of the reduction in insurance coverage.
If the covered individual should die during the 31-day period in which he/she is eligible to make application for conversion, the amount of the Group Life Insurance available for this purpose will be payable to the designated beneficiary or estate, regardless of whether or not you the member applied for conversion.
Question:What happens to my Group Life Insurance if I go on a Leave of Absence?
Answer:
For employees granted a Leave of Absence With Pay, their Group Life Insurance will be continued and the premium for additional term insurance, will be deducted from their earnings.
For employees granted a Medical Leave of Absence Without Pay, (such as while awaiting LTD Benefits or on Pregnancy, Adoption, or Parental Leave), coverage will continue at the level immediately prior to leaving, and the employee must make arrangements for payment of premiums for any additional insurance (in Option II) during their absence from work.
Employees on an approved Leave of Absence Without Pay for any reason other than those mentioned above, will continue to be insured under the The Company Plan, but arrangements must be made for payment of premiums for any additional insurance (in Option II) during their absence from work.
Question:What happens to my Group Life Insurance if I go on Long Term Disability (LTD)?
Answer:
Effective on the first day of the month coincident with or immediately following the day benefits are first payable under the LTD Plan, the employee will be insured for an amount equivalent to the total amount of life insurance prior to the start of the disability income benefits. Employees on LTD will not be required to make premiums while in receipt of LTD Benefits.
Question: Can I change my designated beneficiary?
Answer:
Yes. A member of the Group Life Insurance Plan may name anyone he/she wishes to be their beneficiary and they may changetheir designated beneficiary at any time subject to legislation governing such changes. Employees may contact their Human Resources/Employee Services Office for specific details.
Questions: What happens if I die?
Answer:
In the event of a member's death, the named/designated beneficiary will receive the amount of insurance in force at that time. If the designated beneficiary has predeceased the member, the insurance will be paid to the member's estate. Payment is made in a lump sum and which is not taxable (at the present time).
LIVING BENEFIT
Question: What is a Living Benefit?
Answer:
This benefit permits employees who are terminally ill to receive a portion of their group life insurance while they are still alive.
Eligible employees may apply for up to $50,000, or 50% of their total group life insurance (basic + additional) amount, whichever is less. The attending physician must state that death is anticipated to occur within 24 months.
Question: How does an employee apply for this benefit?
Answer:
The employee must write to the Director, Benefits, stating their intent to apply and the amount he/she wishes to have advanced. Along with this request, there must be a letter fromthe employee's attending physician stating that the employee is competent and able to understand a transaction of this nature, the specific nature of the patient's illness and the anticipated date of death.
Question: If approved, how is the money paid-out?
Answer:
The funds are advanced to the employee in the form of a loan with interest payable at the current rate of interest upon the employee's death. The amount of the advance, along with the accrued interest, are deducted from the amount payable to the beneficiary following death.
DEFINITIONS
1.Base Annual Earnings
The employee's base annual earnings are base weekly earnings multiplied by 52.1786, or base monthly earnings multiplied by 12. In the case of hourly-rated employees, base weekly earnings are derived from the base hourly rate multiplied by normal scheduled hours of work up to a maximum of 40 hours. Base earnings do not include any premiums or allowances, such as overtime or isolation pay.
2.Basic Term Insurance
Base term insurance is equal to two times base annual earnings for all members except for executives. It is mandatory for all members of the The Company’s Group Life Insurance Plan. The premiums are paid by The Company. For Executive staff this amounts to one times base annual earnings.
3.Additional Term Insurance
Additional term insurance is the optional term insurance equal to one times base annual earnings which a member may elect to purchase in addition to the basic term insurance coverage. The premium for this Additional Term insurance is paid by the employee through payroll deduction. For Executive staff this amounts to one, or two, times base annual earnings.
SPOUSAL LIFE INSURANCE
Question: Who is eligible for Spousal Life Insurance?
Answer:
Spousal Life Insurance is available to all active employees who are members of the The Company’s Group Life Insurance Plan. Participation is optional.
Question: Who is considered to be an eligible spouse?
Answer:
Your eligible spouse is the person to whom you are legally married, or with whom you have been living in a common-law relationship for at least 12 months and whom you publicly represent as your spouse. This includes same sex spouses.
Question: Who is the beneficiary?
Answer:
The beneficiary of the spousal life insurance policy is the employee who is paying the premium.
Question: How much spousal life insurance can an employee purchase?
Answer:
Insurance is available in units of $10,000 to a maximum of $150,000 (or 15 units).
Question: How much does it cost?
Answer:
The cost depends on the age and smoking status of your spouse.
Premium rates will change as the spouse's age increases. In addition, premium rates may be adjusted from time to time to reflect experience with the plan and the number of employees whose spouses are enrolled. The higher the participation, the more stable the rates are likely to remain over time. Rates are not expected to change more than once every two years.
Question: Does my spouse qualify for non-smoker rates if he/she has quit smoking?
Answer:
To be eligible for non-smoker rates, your spouse must have ceased smoking for at least 12 months immediately prior to the application and must sign the declaration as to his/her status on the enrollment form. Misrepresentation may result in denial of the claim.
Question: Are there any limitations?
Answer:
Yes. No benefit will be paid if the spouse was confined in hospital on the day of becoming eligible for insurance and has been continuously so confined until his/her death.
Question: How do I enroll/sign-up?
Answer:
If you and your spouse decide to enroll, you should request an application form from your Human Resources/Employee Services Department. This form also includes health questions as well as a smoker declaration. The Great-West Life Assurance Company will review the application and notify you whether or not it has been accepted. If you later decide that you require more spousal insurance, complete the same process.
Initial eligibility of a spouse (eg. up to 31days after becoming a member of The Company’s Group Life Insurance Plan) and birth or adoption of first child are considered change of life events for these purposes. If you apply to enroll or to increase the number of units of spousal coverage within 31 days after the occurrence of any of these events, coverage will be automatic. In other words, your spouse will not need to supply evidence of insurability.
Question: What happens if I leave The Company?
Answer:
Spousal Life Insurance coverage expires at the end of the month in which employment is terminated, or the employee retires. Within 31 days following termination, or retirement, the individual is eligible to request the conversion option set out below:
Conversion Option
- Within 31 days after the month in which the employee terminates employment, or retires, he/she is eligible for the Conversion Option.
The completed Application Form must be received by Great-West Life (the insurer) within the 31-day eligibility period.
- The conversion option gives individuals the right to purchase from the insurer without medical examination, an individual policy in a form customarily issued at the time by the insurer, for an amount equivalent to the insurance coverage.
If you have any further questions, please contact your Human Resources/Employee Services Department.