What Is the Optional Universal Life
Insurance Program?
Universal Life is a form of life insurance that consists of term life insurance protection, plus a tax-deferred cash accumulation fund. Your cash accumulation fund builds on a tax-deferred basis. As a participant, you may withdraw funds or borrow against the cash value of the fund, within policy limits. You may apply for individual Universal Life policies for your spouse and children even if you do not elect Universal Life coverage for yourself.
In addition to Universal Life policies, you may also apply for term life insurance on your spouse and dependents as an attachment to a Universal Life Policy (Term Riders).
Upon enrollment, you will be required to elect Option A or Option B. With both options, you select the level of life insurance coverage and the amount of salary deduction to be added to your Cash Accumulation Fund. Later, you can, within policy limitations, change the amount of term insurance that you carry and the amount of the premium that you pay, increasing or decreasing the growth of your cash accumulation fund.
If you elect Option A, the payment at the time of death will
be the face amount of the life insurance that you have
selected, unless the "Minimum Death Benefit"
(described on page
UL-7) exceeds the face amount of your life insurance. As the
policy's accumulation fund increases, the amount of term
life insurance decreases.
If you elect Option B, the payment at the time of death will be the face amount of the term life insurance that you have selected, plus the value of your cash accumulation fund.
You may purchase universal life insurance through MetLife's Universal Life Program. The benefits will be payable in addition to your basic life benefits or any supplemental life insurance you elect. You can continue your Universal Life coverage after you leave the City with no change in premiums.
Program Eligibility
Who Is Eligible
You are eligible to participate in the City of Chicago Optional Universal Life Program if you are an active full-time employee or an active School Crossing Guard.
You are not eligible to participate in this program if you are:
a seasonal employee,
hired for a temporary program,
an emergency appointment employee,
paid by voucher,
a Library Page, or
a part-time employee regularly scheduled
to work less than 84 hours a month.
In addition to being an active full-time employee or an active School Crossing Guard, you must be 18 - 70 years old on the date the policy is issued.
Your Eligible Dependents
You may enroll the following dependents in the Universal
Life Program:
your spouse, and
your unmarried children under age 26.
The term "children" includes:
natural children,
stepchildren, and
legally adopted children.
In addition to the preceding criteria, the following eligibility rules apply to your spouse and dependents.
|
Spouse Universal
Life Policy: |
Spouse must be 18 - 55 years old as of the issue date of the policy. |
| Spouse Term Rider: | Spouse must be 18 - 55 years old and cannot be more than 15 years younger, nor more than 18 years older than employee as of the issue date of the policy. A spouse term rider will be issued as an attachment to the employee's Universal Life policy. |
| Children's Universal Life: | Child must be ages 14 days to 19 years as of the issue date of the policy. Children ages 20 - 25 years must be unmarried and a full-time student at a school that requires a high school diploma or a General Equivalency Degree (GED) as a requirement for admission to the school, as of the issue date of the policy. |
| Children's Term Rider | Child must be ages 14 days to 17 years as of issue date of policy. The primary insured on the Universal Life policy (you or your spouse) must be ages 18 - 55 years as of the issue date of the policy. A Children's Term Rider will be issued as an attachment to the employee or spouse universal life policy. |
:
Enrolling in the Program
You can call MetLife at (800) 634-5007 to ask about enrolling in this program. If you apply for coverage within 60 days of your date of hire, you will be required to answer three health related qualifying questions and no physical exam will be required to obtain coverage for yourself. However, coverage may be denied by MetLife, based upon your answers to these questions.
If you apply for coverage more than 60 days after your date of hire, you must provide evidence of insurability (proof of good health) and a physical exam may be required. MetLife may deny coverage based upon its review of your health status.
When Coverage Begins
When you have returned all completed and signed application forms to MetLife, you will be issued a Temporary Insurance Agreement. The Temporary Insurance Agreement:
covers you and your eligible dependents
(if you apply for coverage for them) for the amount of
insurance you applied for up to a maximum of $250,000; and
covers you and your eligible dependents
(if you apply for coverage for them) from the date you apply
for the policy up to 120 days or until the date that your
policy is issued or declined, whichever occurs first.
If you or your spouse or dependents for whom you have applied for coverage die before the policy is issued, benefits will be paid unless death results from suicide or death results from a condition that was misrepresented on the application for coverage.
How the Program Works
(Your Coverage Options)
Universal Life Policies
The program offers universal life insurance coverage that protects you and your family in the event of death. It can also help you set aside money for the future. You can continue the policy when you leave the City or retire. You can apply for individual Universal Life Policies for yourself, your spouse and your dependents. You are not required to personally participate in the program to apply for policies for your spouse and dependents.
Cash Accumulation Fund
After the cost of insurance and expenses are deducted from the premium you pay, the balance goes into the cash accumulation fund. The cash accumulation fund is the part of the universal life policy that has a cash value and is credited with interest. You are entitled to take loans against the cash value or make withdrawals from the fund throughout the life of the policy. Interest is earned at a rate declared by MetLife on a quarterly basis. The rate will never be less than 4% which is the guaranteed interest rate.
Death Benefit Options
When you enroll, you will choose one of two options which will pay death benefits to your beneficiary(s), Death Benefit Option A or Death Benefit Option B. The option which you choose will, in part, determine the amount of premium you pay.
Option A
Death Benefit Option A will provide for payment, at the time of death, of the specified face amount of term insurance, that is the amount of insurance coverage you have selected. As the policy's accumulation fund increases, the amount of term life insurance decreases. Your death benefit remains constant until the "Minimum Death Benefit" (described below) exceeds the specified face amount.
Death Benefit Option A provides a specified face amount that includes the accumulation fund. As an example, if you have a $25,000 Option A Death Benefit and at the time of death, the cash value of your accumulation fund is $5,000, the death benefit could consist of the $5,000 accumulation fund and $20,000 of term life insurance. In this example, the monthly insurance costs would be based on $20,000 of term life insurance.
Option B
Under Death Benefit Option B, the death benefit is equal to the specified face amount of insurance plus the value of the accumulation fund on the date of death. The amount of term life insurance remains constant. As the accumulation fund increases, the total death benefit increases.
As an example, the insurance amount could be $25,000. If you have accumulated $5,000 in your cash accumulation fund, your death benefit would be $30,000, the face amount of the policy plus the $5,000 in the cash accumulation fund. In this example, the monthly insurance costs will be based on $25,000 of term life insurance.
Minimum Death Benefit
Under both Options A and B, there is a Minimum Death Benefit that is required by law and is expressed as a percentage of the accumulation fund. In no case will the death benefit be less than the amounts shown on the next page.
|
Age of Insured on Date of Death |
Minimum Death Benefit
|
|
40 or younger
|
250%
|
|
41-45
|
243-215%
|
|
46-50
|
209-185%
|
|
51-55
|
178-150%
|
|
56-60
|
146-130%
|
|
61-65
|
128-120%
|
|
66-70
|
119-115%
|
|
71-75
|
113-105%
|
|
76-90
|
105%
|
|
91-95
|
104-100%
|
Term Insurance Riders
In addition to individual Universal Life policies, you may also apply for Term Insurance Riders for your spouse or dependents at an additional cost. A term rider is a policy that is issued as a supplement to a Universal Life policy. You may only apply for a term rider if you apply for a Universal Life policy.
Spouse Term Rider
The Spouse Term Insurance Rider provides term insurance payable if your spouse dies prior to the expiration of coverage (generally the spouse's sixty-fifth birthday). The spouse Term Insurance rider is issued as an attachment to your Universal Life Policy. Additionally, if your spouse has elected a Universal Life policy, your spouse may elect a spouse term rider for his or her policy. This type of rider is available for an eligible spouse who is age 18-55 years at the time the rider is issued.
The Primary Insured cannot be more than fifteen years older or more than 18 years younger than his or her spouse. If the Primary Insured dies while the rider is in force, a supplementary paid-up insurance policy (the face value of the rider) will be issued to the spouse on whom the rider was issued.
Coverage is available in amounts from $10,000 up to two times your base pay, to a maximum of $50,000.
Children's Term Rider
The Children's Term Insurance Rider is available for your eligible children as defined in the section Who Is Eligible on page UL-3. The Children's Term Insurance rider is issued as an attachment to either your or your Spouse's Universal Life Policy. Benefits from this policy will be paid if your child dies before coverage ends. Coverage will end for your child when he or she attains age 25 or is no longer considered a dependent, whichever occurs first.
Coverage is available in amounts from $5,000 to $20,000, not to exceed 25% of the face value of the Universal Life policy on which the rider is issued.
Universal Life Insurance and
Term Rider - A Comparison
If you are considering covering your dependents, make sure you are familiar with both the Universal Life Insurance and Term Rider features of the program.
|
Spouse |
||
|
Feature
|
Universal Life
|
Term Rider
|
| Age on Date of Issue | Age 18 - 55 | Age 18 - 55 |
| Restrictions | None |
Issued only as an
attachment to your Universal Life Policy. Spouse cannot be more than 15 years younger, nor more than 18 years older than you on the issue date of the policy. |
|
Insurance
Amount Available |
Minimum of
$25,000 up to two times your base pay - $50,000 maximum |
Minimum of $10,000 up to two times your base pay - $50,000 maximum |
| Cash Value |
Accrues over
life of policy |
None |
| Coverage Ends | At age 95 | At age 65 or when converted |
|
Children |
||
|
Feature
|
Universal Life
|
Term Rider
|
| Age on Date of Issue |
Age 14 days to 19 Age years. Children 20- 25 years of
age are eligible if they are unmarried and enrolled
in an approved school |
14 days to 18 years |
| Restrictions | None | Issued only as an attachment to your or your spouse's Universal Life Policy |
|
Insurance
Amount Available |
$25,000 | $5,000 to $20,000 with Amount a maximum of 20% of Available the value of the policy on which the rider is issued |
| Cash Value |
Accrues over
life of policy |
None |
| Coverage Ends | At age 95 | At age 25 or when the child is no longer considered a dependent |
Under the Universal Life Insurance Program, your premiums remain the same throughout the life of the policy, even when you leave City employment. You can maintain your Universal Life and term rider(s) when you leave City employment, as long as you continue to pay the premium.
Disability Waiver Benefit
A Disability Waiver Benefit is available at an additional cost. If you are covered by the Disability Rider and you become totally disabled, as described in the rider, before age 60 and your disability lasts for at least six months, the monthly term life insurance costs will be waived while you are totally disabled. If total disability continues to age 65, all future monthly term life insurance costs will be waived as they fall due.
Accidental Death Benefit
An Accidental Death Benefit is available at an additional cost. It provides an additional amount, equal to the face amount of your initial Universal Life policy if you die from an accident. An amount equal to twice the specified face amount of accidental death insurance is paid if the accident occurred while you were a fare-paying passenger in a licensed public conveyance being operated by a common carrier for passenger service.
When Benefits Are Not Paid
During the first two years of coverage, benefits will not be paid if:
death results from suicide whether sane or
insane, or
death results from a condition that was
misrepresented on the application for coverage.
Your Beneficiary
Naming Your Beneficiary
On your enrollment or application form, you will need to name your beneficiary, the person or persons who will receive benefits if you die while you are insured. If your beneficiary has preceded you in death, the benefit will be paid to the executor or administrator of your estate, or in accordance with the other options described in your policy.
Changing Your Beneficiary
If you wish to change your beneficiary after your initial enrollment, you may do so. To change your beneficiary, you must contact the plan administrator. The change of beneficiary will take effect when your request is received and processed.
Your Premiums
The premium that you pay through payroll deductions is the sum of the cost of your insurance, expenses (7.5%) and the amount you contribute to your cash accumulation fund.
The premium that you pay for your insurance is based on:
the option(s) selected;
the age of the person insured at the time
the policy is issued; and
the amount of insurance you select.
There are two premium rating structures, a standard rate for smokers and another lower rate for non-smokers.
To get specific rate information, you must call the plan administrator.
See the Important Numbers and Web Sites section of this handbook for more plan administrator information.
Changing Your Coverage Amounts
You may increase or decrease the amount of coverage, within policy limits.
Annual Statements
Each year on your policy anniversary you will receive an annual statement for each policy you own. The annual statement shows all premiums paid, expenses, cost of insurance and interest credited during the past year.
Policy Loans and Withdrawals
During your lifetime you may withdraw funds or borrow against the cash value of your fund. The cash value of the policy during your lifetime is equal to:
The Accumulation Fund
MINUS
The Applicable Surrender Charge
MINUS
Any policy loan and loan interest payable
Full Cash Withdrawal
You may request a full cash withdrawal of your funds by submitting a written request to the plan administrator. You will be paid the full cash value based upon the date that the request is received by MetLife. If you request a full cash withdrawal, your policy will terminate.
Partial Cash Withdrawal
At any time after your policy has been in force for two full years, you may request a partial cash withdrawal. Each partial cash withdrawal must be at least $250. Your partial cash withdrawal will be paid upon receipt by MetLife of your written request. When a partial withdrawal is made, your cash accumulation fund will be reduced by the amount of the partial withdrawal. If you make a partial withdrawal that reduces the cash value of your fund to less than $500, it may be treated as a full cash withdrawal.
If you have elected Death Benefit Option A, the Specified Face amount of your insurance will be reduced by the amount of the partial withdrawal. If the partial withdrawal causes the specified face amount of your insurance to be reduced to less than $25,000, your partial withdrawal will be treated as a full cash withdrawal.
Policy Loan
You may make a policy loan against the cash value of your accumulation fund. The most that you may borrow at any time is the current cash value less two times the amount of the monthly deduction just prior to the loan.
Loan interest is charged daily at the rate of 8% a year and is due at the end of each policy year. You may choose to pay MetLife directly for the interest due. Interest not paid within
31 days after it is due will be added to the amount of the
loan, decreasing the cash value of your cash accumulation
fund. It will be added as of the due date and will bear
interest at the same rate as the rest of the loan.
If you make a policy loan, it may affect the interest rate
credited to your accumulation fund.
When Coverage Ends
Universal Life
Universal Life coverage continues as long as premiums are paid while the insured is alive before the final date of the policy (age 95). However, the coverage can end for the nonpayment of premium, cash surrender or if you or the owner of the policy requests cancellation.
Spouse Term Rider
Your spouse term rider generally ends when your spouse turns age 65. This policy can be converted to an individual policy if you apply for conversion coverage prior to expiration of the policy. (See the Section on Continuing Coverage on page UL-18.)
Children's Term Rider
Your children's term rider generally ends when the insured reaches age 25 or when the insured is no longer considered a dependent, whichever is first. Your child is no longer considered a dependent if he or she marries or stops attending school. This policy can be converted to an individual policy if you apply for conversion coverage prior to expiration of the policy. (See the Section on Continuing Coverage on page UL-18.)
Continuing Coverage
Transferring Ownership Universal Life
As the employee, you are the owner of all Universal Life Policies. However, you may transfer ownership at any time. The individual to whom you transfer ownership will be responsible for premium payments. To transfer ownership of your Spouse or Dependent policy, you must contact MetLife at 1-800-634-5007
Conversion Privilege Term Riders
You can convert your spouse or children's term rider to an individual term life policy without having to provide evidence of insurability (proof of good health) if you do so before expiration of the policy. Your conversion policy may be in an amount up to five times the value of the policy at the time of conversion.
When You Leave City Employment
When You Terminate Employment
When you terminate employment with the City of Chicago and you wish to continue any or all of your coverage, you must contact MetLife and make arrangement for direct payment of your premiums. If you do not arrange with
MetLife to continue premiums, premiums will be deducted from your cash accumulation fund until the fund balance is inadequate to cover the cost of your premium. At that time, your policy would be canceled.
If You Take a Leave of Absence or Are AWOL
If you take a Leave of Absence or are off the payroll for any reason and you wish to continue any or all of your coverage, you must contact MetLife and make arrangements for direct payment of your premiums. If you do not arrange with MetLife to continue payment of your premiums, your premiums will be deducted from your cash accumulation fund until the fund balance is inadequate to cover the cost of your premium. At that time, your policy would be canceled.
Canceling the Policy
Universal Life
You may cancel your Universal Life policy at any time and receive the cash value of your cash accumulation fund at the time of cancellation. The cash value of your accumulation fund is equal to the accumulation fund minus any applicable surrender charge minus any policy loan and loan interest payment due. If you cancel your policy within the first ten years, there will be a substantial charge (a surrender charge) and you may receive nothing from the cash accumulation fund.
Term Riders
You may cancel your Term Riders at any time. There is no cash value for a term rider.
:
Claiming Your Benefits
To File a Claim
To receive benefits, the beneficiary must file a claim. To file a claim, contact MetLife at 1-800-634-5007.
If a Claim Is Denied
If all or part of a claim is denied, you are entitled to appeal the decision. You may initiate the appeal by contacting MetLife Customer Service at 1-800-634-5007.
November 2002