Business and Finance.

life insurance FAQs

Frequently Asked Questions
Life Insurance

TOPICS

Basic Life Insurance

Supplemental Life/AD&D Insurance

Dependent Life Insurance

Imputed Income

Beneficiaries

BASIC LIFE INSURANCE

What is the basic life coverage?
The university provides term life insurance equal to one times base salary for benefits eligible faculty and staff, with a $15,000 accidental death and dismemberment insurance policy.  For more information, visit the BENEFIT GUIDE | Retirement/Insurance.
Look up the maximum benefit and age reduction provisions on page 8 in the BENEFIT GUIDE | Retirement/Insurance.

What is the difference between Aetna and The Hartford plans?
Please review the comparison located on page 7 in the BENEFIT GUIDE | Retirement/Insurance.

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SUPPLEMENTAL LIFE/AD&D INSURANCE

What are the premium rates?
Premium rates can be found on page 8 of the BENEFIT GUIDE | Retirement/Insurance.

What is the difference between Aetna and The Hartford plans?
Please review the comparison located on pages 8-10 in the BENEFIT GUIDE | Retirement/Insurance.

What is Evidence of Insurability?
Evidence of Insurability (EOI), also known as proof of good health, is the documentation that an applicant for life insurance is sufficiently healthy to be approved for coverage.

Which Supplemental Life Insurance enrollment choices will require me to submit EOI?
Aetna supplemental life insurance may require EOI.  Refer to page 7 of the Benefit Guide for plan rules.

Hartford supplemental life coverage does not require EOI for coverage.  However, after your initial 30-day enrollment period there are limits.  Refer to page 7 of the BENEFIT GUIDE | Retirement/Insurance. for plan rules.

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DEPENDENT LIFE INSURANCE

What are the premium rates?
Premium rates can be found on page 10 in the BENEFIT GUIDE | Retirement/Insurance.

What is the difference between Aetna and The Hartford plans?
Please review the comparison located on pages 8-10 in the BENEFIT GUIDE | Retirement/Insurance.

What is Evidence of Insurability?
Evidence of Insurability (EOI), also known as the proof of good health, is the documentation that an applicant for life insurance is sufficiently healthy to be approved for coverage.

Which Dependent Life Insurance enrollment choices will require EOI?
Aetna supplemental life insurance may require EOI.  Refer to page 7 of the BENEFIT GUIDE | Retirement/Insurance. for plan rules.

Hartford dependent life coverage does not require EOI for coverage.

If I enroll in Dependent Life Insurance, do I have to list all those that I want covered as Dependents on my Benefits Enrollment/Change form?
No.

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IMPUTED INCOME

What is imputed income on group life insurance?
Under Internal Revenue Code (IRC) Section 79, employers are required to calculate imputed taxable income for employees that receive group life insurance coverage in excess of $50,000.  This does not mean that an employee will pay taxes on the excess benefit amount, but rather that they will pay taxes on the value of the excess benefit.

The total value of your combined group basic and supplemental life insurance, less $50,000, is considered imputed income for the purpose of calculating federal income tax.  However, although imputed income adds to your taxable wage basis, the increase may be offset by the benefit of having pre-tax deductions for your employee supplemental life insurance plans.

To calculate your imputed taxable income for the total value of your group life insurance, use the following formula and the table prescribed by the IRS.  Use your age as of the last day of the calendar year.

CALCULATE YOUR IMPUTED TAXABLE INCOME

FORMULA

EXAMPLE 1

EXAMPLE 2

Your age on the last day of the calendar year 24 59

Total coverage amount

(Add Aetna Basic Life, Aetna Supplemental Life,
Harford Basic Life and Hartford Supplemental Life):

$60,000 $100,000
Total coverage amount
minus $50,000 equals excess coverage amount:
$10,000 $50,000
Divide excess by $1,000: $10 $50
Multiply by appropriate age rate
from the IRS table below:
$0.05 $0.43
This is your monthly imputed income amount:  $0.50 $21.50
Multiply by 12 (months),
then divide by 26 (pay periods)

to get your biweekly imputed income amount:
$0.23 $9.92

IRS TABLE FOR CALENDAR YEAR 2013*

AGE

MONTHLY COST PER $1000
OF EXCESS COVERAGE

Under 25 $0.05
25-29 $0.06
30-34 $0.08
35-39 $0.09
40-44 $0.10
45-49 $0.15
50-54 $0.23
55-59 $0.43
60-64 $0.66
65-69 $1.27
70+ $2.06
* NOTE: The IRS imputed income rates per $1,000 in coverage are subject to change each January 1.  At the time these FAQs were compiled, the IRS had not yet announced rate changes for 2014.

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BENEFICIARIES

Do I need to designate beneficiaries for my life insurance plans?
Yes.  For the Basic and Supplemental plans, you should designate primary and secondary (contingent) beneficiaries.
You are automatically the beneficiary for any Dependent life coverage; you cannot designate another person to be the beneficiary.

How do I designate a beneficiary?
You can update your beneficiary designation at any time online through My ASU > My Employment > Benefits > My Benefits Summary.

How do I designate an estate or trust as a beneficiary?
Submit a Benefits Enrollment/Change form with the estate or trust designated in the beneficiary section of the form with a copy of the trust or estate document(s).
IMPORTANT NOTE: Review and update your beneficiary information at least once a year.

What if my ex-spouse is named as my beneficiary?
A.R.S. §14-2804 revokes any provisions naming your ex-spouse as a beneficiary or as an executor, conservator or guardian.  Unless your will states otherwise, your divorce automatically revokes any provisions naming your ex-spouse as a beneficiary or as an executor, trustee, conservator or guardian.  If your ex-spouse is listed, you must change the beneficiary designations for your life insurance and individual retirement accounts after your divorce.

Can I designate my ex-spouse as my beneficiary after my divorce?
Yes.  Your beneficiary designation with a new relationship (i.e., friend) must be executed after the date of your divorce.

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