Life Insurance


Life Insurance

Life Insurance Circular

General Information

1. A revised administrative instruction (ST/AI/2002/6) has been issued governing the policies and procedures for the United Nations group life insurance plan made available to staff and former staff, with effect from 1 October 2002. The present circular should be read in conjunction with that administrative instruction.

2. This circular announces several key changes in the group life insurance programme which will come into effect on 1 October 2002, as follows:
(a) The schedule of life insurance brackets which heretofore has been the basis for determining the level of life insurance benefit to which a participant is entitled, as well as the related monthly premium, will be replaced by a more streamlined system without brackets, as described in detail in paragraphs 7 and 8 below;
(b) The life insurance multiplier, i.e. the factor by which pensionable remuneration is multiplied to determine the coverage level, will increase from 2.5 to 3.0. At the same time the maximum coverage amount will increase from $250,000 to $300,000 (see para. 9);
(c) The levels of coverage for participants reaching age 62 and staff entering the plan at age 62 are increased (see paras. 10 and 11);
(d) The age thresholds applicable to the after-service life insurance programme are increased by five years at each level (see para. 13 (b));
(e) A new Accelerated Death Benefit is introduced whereby a participant may opt to receive a proportion of his or her life insurance coverage at a discount, under certain specific conditions relating to terminal illness (see paras. 16-20);
(f) The monthly group life insurance premium rate will remain at $0.30 per $1,000 of coverage, notwithstanding the increased level of benefits.

3. The present circular also includes a summary of benefits under the United Nations group life insurance plan, information about the responsibility for maintaining life insurance records, guidance regarding the steps for making a life insurance claim , additional information from Aetna about the new Accelerated Death Benefit , and sample policy conversion premium rates.

Eligibility criteria

4. Participation in the plan is voluntary for all eligible staff. No subsidy is paid by the Organization.

5. The eligibility criteria and enrolment rules pertaining to the group life insurance are set out in section 2 of ST/AI/2002/6 and, for convenience, are summarized below. Coverage under the plan is available to all staff members who receive a letter of appointment of six months or more and who have received medical clearance upon appointment. Enrolment in the plan is automatic if such staff members apply for coverage within 60 days of signing the qualifying letter of appointment. Eligible staff members who apply for coverage after the 60-day opportunity must do so using a special "evidence of insurability" form. The insurance company (Aetna Life Insurance Company) reserves the right to reject any application by a staff member who applies after 60 days and may require the applicant to undergo a medical examination at the applicant's own expense. Those staff members whose applications are accepted will be covered from the date on which Aetna gives its written consent. It should be noted that the insurer does not accept "evidence of insurability" statements that have been signed more than six months prior to their receipt by Aetna.

Coverage and premiums

6. Subject to the terms and conditions of the policy, the insurance coverage for eligible staff members consists of: (a) the amount of life insurance payable in the event of death from any cause at any time or place; and (b) an additional sum payable in the event of accidental death and dismemberment. It should be noted that the plan provides term insurance only. Should a staff member elect to withdraw from the plan before a claim is paid, there is no cash value at the time of coverage termination.

7. Heretofore, life insurance levels have been set out in a schedule that related coverage amounts to ranges of pensionable remuneration, denominated in United States dollars. The coverage amount corresponded to 2.5 times the pensionable remuneration figure at the top of each bracket. For example, a participant whose pensionable remuneration was $35,789 fell in the pensionable remuneration bracket [$35,001-$37,500], and had a coverage amount of $93,750 (equivalent to 2.5 times $37,500). Only when that participant's pensionable remuneration rose above the top of that bracket (i.e., above $37,500) would the amount of life insurance increase to the next highest level. In effect, the system in place until now has meant that life insurance coverage could only be increased in discrete amounts at such times as the participant's pensionable remuneration jumped to the next bracket. Moreover, under this system, the monthly premium payment of staff members whose pensionable remuneration is denominated in a currency other than the United States dollar varied from month to month, depending on the rate of exchange between the local currency and the United States dollar.

8. Under the new system coming into effect on 1 October 2002, a staff member's life insurance entitlement will be directly linked to his or her pensionable remuneration and will be defined in terms of the related currency. Under the new system, whenever pensionable remuneration increases, the life insurance amount will increase proportionately also, without regard to any fixed schedule of pensionable remuneration brackets. As a result, it now becomes possible to state the required premium contribution as a percentage of pensionable remuneration, comparable to the percentage contribution rates found in the health insurance plans.

9. With effect from 1 October 2002, the normal level of coverage for staff enrolled in the plan will be that amount which is equal to three (3) times the participant's pensionable remuneration, subject to a maximum amount of $300,000. The current premium rate of $0.30 per $1,000 of coverage is equivalent to .09 per cent of pensionable remuneration. Thus, for example, if the level of pensionable remuneration of a participant is $35,789, the corresponding level of life insurance would be three times that figure, $107,367. The corresponding monthly premium payment, based on .09 per cent of pensionable remuneration, would be $32.21. In the case of the maximum coverage amount of $300,000, the maximum monthly premium payment will be $90.

Other coverage provisions

10. The coverage of staff members entering the plan at age 62 is limited to $20,000 (increased from $14,000). The same limit applies to accidental death and dismemberment insurance coverage.

11. The maximum coverage for all staff members still in service at age 62 is $150,000 (increased from $125,000). The same limit applies to accidental death and dismemberment insurance coverage. If the staff member's coverage is higher than $150,000, it will automatically be reduced to that level with effect from the first of the month following attainment of age 62.

12. Staff members whose appointments are terminated for reasons of health in accordance with staff regulation 9.1 (a) are eligible to receive life insurance coverage equal to their coverage on the date of separation, without payment of further premiums, up to age 62. Upon attainment of age 62, the percentage factors set out in paragraph 13 below apply.

Coverage following separation from service

13. Staff members who upon separation from service are participants in the group life insurance plan and who have at least 10 years contributory participation upon leaving the employment of the Organization shall receive continuing coverage, without payment of premium, as follows:

(a) Prior to the age of 55
One year's coverage at the level in effect at the time of separation for each completed 10-year period of contributory participation;

(b) From the age of 55
(i) Between the ages of 55 and 69, coverage on separation from service is 50 per cent of the level of coverage in effect at the time of separation;
(ii) Between the ages of 70 and 74, coverage is 25 per cent of the level of coverage in effect at the time of separation;
(iii) From the age of 75, coverage is 10 per cent of the level of coverage in effect at the time of separation, subject to the following conditions: the minimum benefit after age 75 is the lesser of $5,000 or the amount to which the after-service participant would be entitled before reaching age 75, and the maximum benefit after age 75 is $10,000;
(iv) The reduction to $150,000 at age 62, while still in service, will be ignored in these calculations.

Adjustment of coverage level

14. As indicated in paragraph 8 above, the level of coverage and the corresponding premium will automatically be adjusted whenever an increase in pensionable remuneration occurs. A participant who does not wish to have the increased life insurance coverage afforded by the requisite increase in pensionable remuneration must cancel his or her coverage under the plan. If, at a later date, the staff member wishes to reinstate life insurance participation at the level to which he or she would then be entitled, a new application must be made through the "evidence of insurability" process.

15. The life insurance level of a staff member who, prior to 1 January 2001 when the option was eliminated, executed a waiver of automatic increase and thereby froze the coverage level, will be maintained at that level.

Accelerated Death Benefit

16. A new benefit called the Accelerated Death Benefit (ADB) is added to the group life insurance programme effective 1 October 2002. In essence, this optional benefit provides for the payment to the participant of a portion of his or her life insurance after he or she has been diagnosed as terminally ill, leaving the balance of the life insurance for the benefit of designated beneficiaries after the death of the insured. The addition of this benefit is cost-free to participants at large as the ADB programme will be administered by Aetna on a case-by-case basis using a "discount option". Under this arrangement, the cost of the benefit acceleration is recovered by discounting the ADB payment to the insured applicant.

17. When a participant elects the ADB option, the arrangement will work as follows. First, a gross ADB payment is determined. This amount will be based on a benefit of 50 per cent of the amount of life insurance in force on the election date, taking into account any age reduction due to occur during the terminal illness qualifying period. The appropriate discount will then be deducted from the gross ADB payment to arrive at the net amount actually payable to the insured. Discounts will reflect the interest rate structure described in paragraph 19 below.

18. The remaining amount of life insurance carried in force, after the ADB payment is made, will be the original amount less the gross (before interest discount) ADB payment.

19. The interest rate used to calculate discounts will be the current yield on the 90-day United States Treasury bill on the date the ADB payment is issued. The period used to calculate this charge will begin on the date the ADB is paid and will always be equal to the 12 months terminal illness qualifying period regardless of the actual or expected date of death.

20. Applicants for an Accelerated Death Benefit should contact the Health and Life Insurance Section in the first instance. They will then be provided with a package comprising an application form, a request-for-medical-documentation letter, authorizations for the release of medical information and an ADB disclosure statement.

Conversion privilege

21. Staff members who are enrolled in the group life insurance plan at the time of their separation from the Organization may arrange directly with Aetna to convert to an individual policy at a cost determined by the insurer, without having to produce further evidence of insurability. The premium rate schedule pertaining to the conversion life insurance policy established by the insurer is age-based and bears no relationship to the premium structure of the United Nations group life insurance plan. The participant is then solely responsible for remitting the related payments directly to the insurance company.

22. Inquiries as to contract terms and premium payment instructions, as well as completed applications, should be directed to:
    Aetna Life Insurance Company
    Attention: Life Continuation
    P.O. Box 24846
    Cleveland, OH 44124-0846
    United States of America
    Phone No.: 1-877-503-3448
    Facsimile: 1-440-386-2662

23. The amount of life insurance which may be converted is based on the level of coverage at the time of separation:
(a) Staff members who are under the age of 55 or who have less than 10 years of contributory participation in the plan may convert up to the full amount of their life insurance at separation;
(b) Staff members who separate before age 55 and who qualify for a year of free coverage for each 10 years of contributory participation may convert up to that amount at the end of the period of free coverage;
(c) Staff members age 55 or older who qualify for after-service life insurance (ASLI) may convert to an individual policy with Aetna the amount of the decrease in coverage at separation or, as after-service life insurance participants, at ages 70 and 75. For example, if a staff member has $100,000 of coverage at separation, the after-service benefit would be $50,000. In this case, the staff member may convert up to $50,000 of coverage. When the former staff member reaches age 70 and the after-service benefit drops to $25,000, he or she may convert the $25,000 difference between the new level and the prior $50,000 after-service life insurance level.

24. The conversion privilege must be exercised within 31 days following termination of coverage under the United Nations plan or within 31 days of the date on which the after-service life insurance coverage is decreased.

Designation of beneficiary or beneficiaries

25. Since life insurance benefits are payable to the participant's beneficiary or beneficiaries, it is most important for each participant in the plan to designate the person or persons to whom the participant wishes the benefit to be paid. Special forms are available for the designation of beneficiaries.

26. Only the most recent, properly executed form for the designation of beneficiaries is recognized by the insurance company for the payment of benefits. It is the responsibility of the staff member or former staff member to make sure that the proper person or persons are designated, particularly after death, divorce or other change in the relationship between the person or persons previously designated and the staff member or former staff member.

27. Changes in the designation of beneficiaries may be made at any time.

Transfer between payrolling duty stations and employing organizations, and breaks in service

28. It should be noted that there is no automatic continuation of coverage when a staff member transfers from one payrolling duty station to another or from one employing organization to another. In addition, within the same organization, a staff member who has a break in service is normally terminated and reappointed. Therefore, to ensure continuity of their coverage in the group life insurance plan, staff members must make arrangements to re-enrol upon transfer to the new payrolling duty station, upon being employed by another organization, or upon reappointment after a break in service. To be assured of unbroken life insurance coverage, re-enrolment in the life insurance plan must be accomplished no later than two months following the date of transfer or reappointment; otherwise, an evidence of insurability statement will be required.

Special leave

29. Staff members who are granted special leave on partial pay or without pay may continue to participate in the plan by paying the full premium in advance. Staff members who choose not to retain coverage during a period of special leave without pay of more than two months' duration may re-enrol in the plan only on the basis of satisfactory evidence of insurability.

Information on the Internet and the United Nations Intranet

30. Information regarding the group life insurance programme may also be found on the web site of the Health and Life Insurance Section on the United Nations Intranet (click on "Insurance" on the quicklinks dropdown menu). Forms used in connection with the group life insurance programme are also available from that web site. In addition, the same information may be accessed via the Internet at the following URL:

Supersession of prior circular

31. The present circular supersedes information circular ST/IC/2000/96, dated 21 December 2000, and all previously issued information circulars concerning the United Nations group life insurance plan.