Central Michigan University offers eligible employees life and loss benefits through The Hartford. Life insurance is protection for those who may be left behind, with a cash benefit that can help pay for final plans and offset the loss of future income. Accidental death and dismemberment (AD&D) insurance is protection against loss of motion, sight, limb or life from unforeseen covered accidents.
Life insurance FAQs
When does accidental death and dismemberment (AD&D) apply?
The life insurance part of this plan will pay your beneficiary(ies) the basic level of life insurance you have chosen in the event of your death from any cause.
Accidental death and dismemberment (AD&D) insurance part of this plan will pay your beneficiary the additional AD&D benefit if you die as the result of an accident. This benefit would be paid in addition to the basic life insurance benefit.
The AD&D insurance also pays a benefit if you suffer certain physical losses as a result of an accident (such as loss of an arm, leg, or sight of an eye).
Are there any restrictions (other than the 1x salary requirement), on the level of coverage I choose?
No. But the AD&D must mirror the amount of life coverage you have chosen.
Who covers the cost of a physical, if it is required for proof of insurability?
If a medical exam is required and you are a late entrant (you first turned down coverage when initially eligible), the cost is paid by the employee. If the employee increases coverage, then the cost is paid by The Hartford.
What if my salary changes during the year?
If your salary changes during the year, your coverage amount will increase or decrease accordingly and the cost of the benefit and CMU's contribution will change as well. Your paycheck will change accordingly.
What are the tax considerations associated with the options?
Because you purchase employee life insurance with pre-tax dollars, (CMU's contribution as well as your own) the IRS requires you to claim it as additional income and pay taxes on the actual premium cost of all coverage you purchase over $50,000. The additional income on which you pay taxes is based on your age and the amount of life insurance coverage you select. The "income" from this source is shown as other compensation on your W-2.
For example: If you are 35 years old, earn $45,000 per year and purchase two times your annual base salary ($45,000 x 2 = $90,000), The IRS additional income rate would be $.09 per $1,000 of coverage per month. This is defined as follows:
Therefore, you pay taxes on the additional imputed income amount of $43.20 annually in this example. As you become older, the amount of additional taxable imputed income goes up. For example: if you were 62 in the prior example, you would have to pay taxes on $316.80 of additional income annually.
Who covers the fee for having paper work filled out by the employee's provider?
The employee pays if the provider charges an administration fee for filling out the paperwork.
Is there a limitation on the age at which the life insurance will cover me?
There is a 50% reduction in core coverage at age 70 for new employees. However, there is a grandfather provision as carriers are changed, and current employees, hired before 07/01/1994, will not experience a reduction in coverage.
How is my life insurance premium calculated?
Life insurance levels of 1 or 1.5 times salary are based upon the collective age of all employees and are flat rated. The cost of life insurance over these levels is based on the actual age of the employee and the amount of coverage. The premium portion based on age can therefore increase on an annual basis.
If I terminate employment, is there a conversion/portability privilege for my life insurance and/or my dependent life insurance policy(ies)?
Yes. Life insurance may be converted or ported at the time of termination to individual whole life policy or term life policy. The rates will change, however. You would be billed directly from the carrier. Conversion or portability forms and premium must be filed and received by the carrier within 31 days from date of termination.
If I terminate employment, is there a conversion/portability privilege for my AD&D insurance?
Yes. There is a conversion option only.