Term Life (New York) Product Reference Pamphlet. Term Life 1000 (New York) PRP

Transcription

1 Term Life 1000 (New York) Product Reference Pamphlet Term Life 1000 (New York) PRP

2 The information contained in this product reference pamphlet is intended for the training and education of The Paul Revere Life Insurance Company employees and sales representatives only. Paul Revere has not authorized any other use of this information. Do not give or show it to prospective insureds, employers of prospective insureds, or anyone else not employed by or contracted with The Paul Revere Life Insurance Company. This pamphlet contains highlights of the actual product benefits. Please see the policy for New York for complete details.

3 Contents General Need for Life Insurance...1 Quick Product Summary...2 Product Positioning Within the Marketplace...5 Target Markets...5 Key Competitive Advantages...6 For Employers...6 For Employees...7 Product Positioning Within the Company s Portfolio...8 Sales Opportunities...8 Positioning with Other Types of Life Insurance...9 Cross-selling with Other Product Lines...10 Assessing the Need for Life Insurance Coverage...11 Support Materials Field Supplies...12 Sales Support...12 Applications and Associated Forms...12 Post-sale and Service Support...13 Support Materials ProducerNet...13 Regulatory Requirement...14 NAIC Ilustration Regulation...14 Market Conduct Issues...15 Important Definitions...16 Base Plan Benefits...21 Accelerated Death Benefit Provision...22 Accelerated Death Benefit Disclosure Form...23 Optional Riders...24 Spouse Term Riders...24 Right to Convert in the Event of Suicide of the Insured...25 Waiver of Premium (as it affects the Spouse Term Riders)...25 Children s Term Rider...25 New York Endorsement of Children s Term Rider...26 Waiver of Premium Rider (as it affects the Children s Term Rider)...27 Accidental Death Benefit Rider...27 Waiver of Premium Rider...28 Policy Exclusions...29 Base Policy and Spouse Term Riders...29 Accidental Death Benefit Rider...29 Waiver of Premium Rider...29 Eligibility Guidelines...30 Account...30 Employee...30 Spouse and Dependent Children...30 Spouse Policy...30 Spouse Term Riders...31 Children s Term Rider...31 General Need for a Group Limited Benefit Medical Plan

4 Other Rider Eligibility...31 Accidental Death Benefit Rider...31 Waiver of Premium Rider...31 Aggregating Coverage...31 Aggregating Spouse Term Riders...32 Aggregating Accidental Death Benefit Riders...32 Underwriting Guidelines...33 Life App Additional Forms...33 Levels of Underwriting...34 Post Enrollment Guaranteed Issue (PEGI)...35 Employee (PEGI)...35 Spouse (PEGI)...36 Simplified Issue (SI)...36 Full Underwriting Payroll Deduction Sales...36 Medical Requirements Payroll Deduction Sales...37 Unisex Height and Weight Chart Payroll Deduction Sales...38 Full Underwriting Non-payroll Deduction (Individual) Sales...39 Medical Requirements Non-payroll Deduction (Individual) Sales...39 Unisex Height and Weight Chart Non-payroll Deduction (Individual) Sales...40 Financial Underwriting...40 Medical Examinations...41 Blood Profiles...42 Attending Physician Statements (APS)...42 Inspection Reports...42 Motor Vehicle Reports...42 Questionnaires...43 Additional Coverage/Riders...43 Accelerated Death Benefit Provision...43 Accidental Death Benefit Rider...43 Waiver of Premium Rider...43 Spouse Term Rider...43 Children s Term Rider...44 Signatures...44 Coverage Effective Dates...44 Underwriting Authorization (HIPAA)...44 Service Guidelines...46 Service for Individual Policies...46 Routine Service Requests...46 Other Service Requests...46 Request for Service Form...46 New Application and/or Additional Form...46 Reinstating a Lapsed Policy...47 Adding a Spouse Term Rider...47

5 Adding a Children s Term Rider...48 Changing from Tobacco to Non-tobacco Status...48 Requesting an Advance on the Policy s Death Benefit...48 Service for Claims...48 Filing Procedures...48 Processing Claims...49 Beneficiary Information...50 Index...51

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7 About This Pamphlet The Term Life 1000 Product Reference Pamphlet provides comprehensive product and sales-related information for representatives interested in selling Term Life 1000 coverage. In addition, we strongly recommend that you review the policy for New York, along with the appropriate product brochure and other support materials.

8 General Need for Life Insurance Life is often unpredictable! No matter how much individuals plan ahead or how careful they are, the unexpected may still happen. Life insurance helps individuals plan for what can t be predicted death. The financial impact, especially when coupled with the emotional trauma of a loved one s death, can be devastating to a family that is ill prepared. Life insurance is an excellent financial resource for surviving families as they cope with the circumstances surrounding a death. There are many types of life insurance, but bottom line, they all provide cash to beneficiaries after an insured dies to help replace income and allow the family s current lifestyle to continue. For instance, life insurance payments can be used to: Pay funeral costs and outstanding medical bills. Pay off a mortgage loan and any short- or long-term debts. Create a fund for children s education. Create a retirement fund. Term life insurance offers the greatest amount of coverage for the lowest premium when compared to cash value insurance, such as universal and whole life. This is because term life provides death protection only it does not accumulate cash value. In addition, term life is designed to provide financial protection for a specific term or period of time. It makes the most sense when the need for coverage will disappear at some point, such as when children graduate from school or a debt is paid off. Term life policies pay out the face amount of the policy to a beneficiary upon the death of the insured. Term Life 1000 offers pure insurance protection and guaranteed premium payments with the convenience of payroll deduction. It is affordable life insurance for beginning families, single adults and established families. Many employers offer their employees some type of group life insurance, but the amount of coverage usually is not enough to adequately meet the family s life insurance needs. Plus, group life policies are not always portable, which means employees may lose coverage if they leave their current employer. 1

9 Quick Product Summary Coverage Type Base Plan Benefits Individual term life insurance that pays a lump sum benefit for an insured s death. Death benefits do not decrease. Three plan options (employee and spouse): 10-year level term: $10,000-unlimited maximum, based on underwriting 20-year level term: $10,000-unlimited maximum, based on underwriting 30-year level term: $10,000-unlimited maximum, based on underwriting NOTE: Spouse signature is required on all face amounts over $10,000. Accelerated Death Benefit Provision Automatically included at no additional charge on employee and spouse policies. Allows policyowner to receive an advance up to 75% of policy s death benefit, not to exceed $150,000, if the insured is diagnosed with a terminal illness. Terminal illness means an injury or sickness which results in the insured having a life expectancy of 12 months or less, and from which there is no reasonable prospect for recovery. Minimum payment allowed is 25% of the policy face amount, or $50,000, whichever is lower. Optional Riders Children s Term Rider $1,000-$10, year Spouse Term Rider $10,000-$50,000 (Available with 10, 20 or 30-year term employee policy only) 20-year Spouse Term Rider $10,000-$50,000 (Available with 20 or 30-year term employee policy only) Accidental Death Benefit Rider $150,000 maximum Waiver of Premium Rider Target Markets Designed for use in all markets, unless listed as prohibited in the New Account Manual. Minimum 3 payers Account Size Participation Requirements for Guaranteed Issue The greater of 25 adult (employee/spouse) applications or 20 percent participation is required. Other life coverage does not count toward participation. 2

10 Payment Method Available to both payroll-deduction and individual-pay group (IPG) accounts, following normal payment method guidelines. Non-payroll (individual) sales are available on a fully underwritten basis only. Term Life 1000 does not qualify for pretax treatment. Non-Payroll (Individual) Sales Policy Fee Same face amounts, issue ages, and premiums as with payroll deduction sales. Available as fully underwritten coverage only. Payment methods: bank draft, quarterly, semi-annual or annual billing. $48.00 annually Rate Structure Unisex (for all policies and riders) and expressed as a rate per thousand of death benefit. Tobacco/non-tobacco for employee and spouse policies. Banded by face amount issued. Age last birthday. Employee Eligibility Spouse Eligibility Dependent Eligibility Must be actively employed on a full-time basis (20+ hours per week); employed with present employer for at least 90 days; and actively at work on the date of the enrollment. Issue ages: 10-year, year, year, Must be the legal spouse of an employee. Policy: Must be actively employed, or not disabled or unable to work, at the time of application. Spouse can apply for an individual policy even if the employee does not apply for a Term Life 1000 policy. Issue ages: 10-year, year, year, Spouse Term Riders: 10-Year Rider issue ages, 15-65, spouse 20-Year Rider issue ages, 15-50, spouse Children s Term Rider: Issue ages: 14 days-18 years for children who meet the definition of an insured child. 3

11 Other Rider Eligibility Application Process Portability Renewability Accidental Death Benefit Rider: Issue ages: 15-65, employee or spouse. Applicants must first qualify for a base Term Life 1000 policy. Waiver of Premium Rider: Issue ages: 15-55, employee or spouse. Applicants must first qualify for a base Term Life 1000 policy. Use Life App 06 for all sales. Coverage is portable. This policy is guaranteed renewable as long as premiums are paid when due. At the end of the selected level period, without evidence of insurability, the contract moves to a yearly renewable term (YRT) phase, with guaranteed rates. The YRT phase terminates on the policy anniversary following the insured s 95th birthday. 4

12 Product Positioning Within the Marketplace Term Life 1000 is available to any regular account listed in the New Account Manual (form 97400) that meets the account eligibility requirements. It can also be sold on a non-payroll basis. The most suitable accounts are those that exhibit stability in their work force (20 percent or less employee turnover per year) and have a minimum of three payers. Target Markets Term Life 1000 is designed to appeal to the following target accounts: New or existing accounts where employers do not want to deal with the ongoing administration of a group term life (GTL) plan. A census and renewal are required with GTL plans and group experience/participation determines rates. Term Life 1000 is a simple product to explain and enroll. Accounts with GTL coverage in place. Term Life 1000 can supplement employees GTL coverage and provide additional family coverage options. In addition, Term Life 1000 benefits remain level for the life of the policy. Smaller accounts that may not want to implement a group life program because participation may be hard to achieve and maintain. Larger accounts that may require guaranteed issue and higher coverage limits with better rates for their higher compensated, white-collar employees. This product is also designed to help meet the individual insurance needs of applicants. For example, some applicants may choose it because they have a limited budget for purchasing insurance benefits. Others may need: Large amounts of coverage. Basic insurance protection only. Insurance protection for a limited or specified period of time. Only basic insurance protection because they prefer to build their own financial strength through personal investments and savings. A supplement for their cash value life insurance for a period of time. Regardless of the target market or specific need, if the goal is to purchase the largest death benefit for the least amount of money, then a Term Life 1000 policy can provide an affordable solution. 5

13 Key Competitive Advantages Term Life 1000 offers the following competitive advantages within the marketplace.... For Employers Post enrollment guaranteed issue (PEGI) Non-medical underwriting In accounts with 100+ employees, Term Life 1000 is available on a post enrollment guaranteed issue basis with a participation requirement. Non-medical underwriting, with no blood profiles or medical examinations, is available based on age and face amount. (Refer to the Medical Requirements Payroll Deduction Sales chart on page 42 for more information.) Easy enrollment process Employers enjoy a consistent sales presentation that doesn t change from employee to employee. In addition, one application serves all underwriting levels. Multiple plan options Three plan options 10, 20 and 30-years allows the employer to provide a more flexible plan to suit the employee s specific life insurance needs. Multiple enrollment methods allowed Three enrollment options are available with this product: primarily electronic (EAC), Simple App Submission (SAS), and manual submission. This is especially appealing to brokers who prefer alternative enrollment methods to suit the needs of multiple clients. Family coverage options Family coverage options are available through the Spouse and Children s Term Riders. A spouse policy is also available and counts toward the participation requirement for post enrollment guaranteed issue. 6

14 ... For Employees Broad issue limits Broad issue limits of $10,000 to an unlimited maximum (based on underwriting) means that a wide range of employees, from the budget-conscious to those who are financially established, have the opportunity to purchase coverage. Non-medical underwriting Non-medical underwriting helps eliminate some of the purchasing hassle for employees who would otherwise have to provide health information before being eligible for coverage. It also means that employees with health issues can still qualify for and purchase a Term Life 1000 policy if they meet the basic eligibility requirements. Flexible plan options and face amounts A choice of three plan options, 10, 20 and 30-years, and unlimited face amounts (based on underwriting) gives employees a chance to purchase the plan and coverage amounts best suited for specific life insurance needs. Family coverage options Family coverage options include a spouse policy, Spouse Term Rider and Children s Term Rider. The Children s Term Rider is always guaranteed issue. Additional coverage options Additional coverage options include a Waiver of Premium Rider and an Accidental Death Benefit Rider. Both of these are available on a guaranteed issue basis. Accelerated Death Benefit Provision An Accelerated Death Benefit provision is automatically included with employee and spouse policies for no extra premium. Portable coverage Portable coverage allows employees to keep their coverage with no changes to their plan if they change jobs or retire. Guaranteed renewability Coverage is guaranteed renewable to age 80. 7

15 Product Positioning Within the Company s Portfolio Sales Opportunities Term Life 1000 has numerous features that may be attractive to employees. For instance, the simplicity of the plan design makes it easy for employees to understand the plan options and features during enrollments. Following are additional product features that may enhance your sales opportunities with employees. Three plan options 10, 20 and 30-year level term periods give employees the opportunity to select the term period best suited for their individual situations. Term Life 1000 can provide the full amount of life insurance coverage needed by employees at a low initial cost (compared to cash value insurance), especially for middle age applicants where the need for protection may be at its peak. Two spouse coverage options are available, an individual policy with the same premiums and death benefits as for the employee, or a spouse term rider. Group term life coverage usually does not provide enough coverage to adequately meet an employee s life insurance needs. Term Life 1000 is easy, affordable insurance that the employer can offer to employees to increase their protection. Plus, they have the added convenience of being able to purchase the coverage through payroll deduction. The policy offers additional coverage options through the purchase of specialty riders. Term Life 1000 can also help customers balance their resources by complementing cash value or group life insurance to offer broad long-term insurance protection. 8

16 Positioning With Other Types of Life Insurance Here s how Term Life 1000 compares with the two other common types of life insurance coverage whole and universal life. Cash Value Insurance 1 Term Insurance Whole Life Insurance Universal Life Insurance Offers highest death benefit for lowest cost. Premiums are level for the specified term period. Pays a specified death benefit if the insured dies within the designated term period. Premiums continue for the specified term period. Most expensive form of insurance coverage because of the guarantees. Premiums are guaranteed level for life of policy. Death benefits are guaranteed. Premiums may be paid up if specified in the contract. More expensive than term, less expensive than whole life. Less death benefit for same cost as term. Flexible premiums that may increase or decrease, within certain guidelines. Adjustable death benefits. Cash value builds at current interest rates; premium payments may stop. Does not build cash value. Cash value is guaranteed. Insurance continues as long as cash value is sufficient to fund the policy. 1 Cash value insurance (whole and universal life) is intended to remain in force during the insured s entire lifetime (to the age the policy endows), provided premiums are paid as specified in the policy. It also can build cash value as a result of the policy funding approach. Loans and withdrawals can impact the length of time Each type of insurance product has its own distinct advantages. The one that is best suited for your customers varies based on their individual needs. 9

17 Cross-selling with Other Product Lines Term Life 1000 can complement the sales of other insurance plans in the following ways: DISABILITY plans Term Life 1000 helps guard an employee s financial resources against the uncertainties of life so that he can protect his family s future. The employee may also need to protect his family in the event that he is disabled and unable to earn an income. Packaging a disability plan with Term Life 1000 means an insured can safeguard his current income while he s disabled and also protect his family s future income needs. CANCER plans Cancer plans help offset many of the out-of-pocket expenses related to cancer treatment. This treatment can be expensive, especially if it is required for a number of years. When cancer takes the life of an insured, Term Life 1000 provides family members with a death benefit that can help cover remaining cancer treatment costs, funeral and burial expenses, and the insured s lost income. SUPPLEMENTAL HEALTH plans Accidents and sicknesses are unexpected and may leave a family facing financial hardships. Not only might there be a loss of income, there could also be expenses not covered by a major medical plan, such as deductibles and coinsurance. A supplemental health plan can help families cope in this type of situation. Term Life 1000 offers the protection individuals need to ensure their family s lifestyle, most often at a lower cost than other life insurance products with the same face value. When an accident or sickness unexpectedly takes the life of an insured, Term Life 1000 provides a death benefit to help replace the insured s lost income or help pay for funeral and burial costs, estate taxes, outstanding debts, or final hospital and physician charges related to the accident or sickness. 10

18 Assessing the Need for Life Insurance Coverage Very often, the hardest part of buying life insurance for customers is determining the correct amount. Everyone s financial circumstances and goals are different, and there is no rule of thumb that precisely tells how much individuals need to purchase. However, it is possible to come up with a good estimate that takes into account your customer s specific financial situation. Conducting a needs assessment takes some additional time in the employee meeting. It may not be appropriate or necessary in every payroll-deduction sales situation. If customers express an interest in this service and time is a factor, you may want to use the mini needs-assessment form in the Life Pre-approach Insert (form 52178). Or, you can schedule another appointment with the employee for an in-depth assessment. Determining how much life insurance someone needs requires examination of current and future financial obligations. Then, add up the resources the surviving family members could draw upon to support themselves. The difference between the two is the approximate amount needed for life insurance. Though this calculation sounds simple, it can become complicated and may change as events in life change. Here is an illustration of a simple needs assessment formula. Current and future financial obligations Spouse s earnings, savings, investments and life insurance the customer already owns = Amount of life insurance needed Remember, the ultimate goal of life insurance is to provide a death benefit to cover final expenses, medical bills, or help an insured s beneficiary. Carefully consider the following financial obligations. Immediate Expenses = Funeral costs = Uncovered medical expenses = Mortgage and other debt = Taxes = Estate settlement costs Ongoing Expenses = Food = Housing = Utilities = Transportation = Health care = Clothing = Insurance Future Expenses = College = Retirement You can find additional life insurance needs assessment tools by logging on to the Life and Health Insurance Foundation for Education web site at 11

19 Support Materials Field Supplies The following sales support materials are available from Field Supplies, extension Sales Support Term Life 1000 Product Brochure* *(Use for payroll deduction or non-payroll/individual sales.) Employee Generic Life Pre-approach Flier form form 97595, Spanish form form 97695, Spanish Term Life 1000 Rate Book form Term Life 1000 Rate Sheets 10-year Term Life year Term Life year Term Life 1000 Term Life 1000 Riders 10-year Term Life 1000 with Waiver of Premium 20-year Term Life 1000 with Waiver of Premium 30-year Term Life 1000 with Waiver of Premium form form form form form form form Call Account Services, Sample policy ext or 3353, to order sample. Term Life 1000 Quick Reference Guide form Applications and Associated Forms Life App 06 form Underwriting Authorization Form (HIPAA) form Definition of Replacement Form form Notice New York form Conditional Receipt form Accelerated Death Benefit Disclosure Form form HIV Consent Form form Life Buyers Guide form

20 Post-sale and Service Support Change of Beneficiary Form* Request for Service Form* Change of Ownership Form* *Contact field supplies for NY form numbers. Distribute only written materials that the Marketing Communications department has approved. The materials listed have met that approval. This requirement applies to any written document you prepare, no matter how brief, that describes the Company s business or products. Support Materials ProducerNet Following is a list of support tools available for download from ProducerNet (colonial-paulrevere.com). Competitive Information Employee/Employer Letters Product Overviews Proposal Materials Training Materials Product Frequently Asked Questions Frequently Asked Enrollment Questions Underwriting Frequently Asked Questions Underwriting Overviews 13

21 To access these tools on ProducerNet, click on Product > Life > Term Life 1000 (NY). Regulatory Requirement Review the following regulatory requirement to see how it may affect your Term Life 1000 sales. NAIC Illustration Regulation A life insurance illustration regulation passed by the National Association of Insurance Commissioners (NAIC) seeks to protect customers from being misled by elements of a life insurance plan that are not guaranteed and can drastically impact the performance of their life insurance plan. The regulation requires disclosure of these elements, such as the current interest rates of a universal life plan or the indeterminate premiums of an adjustable term plan. Term Life 1000 is not affected by this regulation because premium rates and death benefits are guaranteed. What that means is the premium a customer is currently paying and renewal premiums that they can anticipate paying in the future are guaranteed as outlined in their policy. There is no need to provide an illustration. You may quote, verbally or in writing, any renewal premium your customer asks for. 14

22 Market Conduct Issues Remember to consider the following market conduct issues when you sell Term Life Accurately represent the policy professionally and honestly. Obviously, meeting this market conduct requirement means thoroughly understanding what you sell. For example: Never guarantee that coverage will be issued to an individual. Do not inappropriately replace or exchange life insurance coverage. (At this time, the Company has made a business decision not to accept replacements because of the complex replacement guidelines in New York.) Always explain coverage effective dates accurately. Discuss New York s policy limitations and exclusions in detail with all applicants. Do not position Term Life 1000 as a replacement for any existing life insurance coverage. In presenting the product to customers, do not use any printed/audiovisual materials or software without first obtaining administrative office review and written authorization. These guidelines apply for customers, as well as for colleagues in training sessions and/or as articles in newsletters. Any communication relating to the Company or its products must be approved in advance by the Marketing Communications department. Do not denigrate or otherwise speak negatively of competitor's life insurance products to your customers decision makers, brokers, policyholders. While you must carefully explain the tax environment for life insurance premiums and proceeds, do not represent yourself as a tax or legal advisor. Accurately represent illustrations in compliance with NAIC regulations during sales presentations. Refer to the NAIC Illustration Regulation section for complete guidelines. Cancellation of a base plan also cancels any attached riders. For additional information on general market conduct issues, refer to the Market Conduct Issues Training Manual & Test (form 48606). Your Paul Revere contract and the Sales Organization General Policies and Guidelines Manual also address market conduct behavior and issues. (To view or download the Sales Organization General Policies and Guidelines Manual, visit ProducerNet at Resources + Forms > Support Materials > Tutorials & Manuals > Policy & Guidelines Manual Paul Revere.) 15

23 Important Definitions Before you proceed, review the following important definitions for New York. For more information, refer to the Term Life 1000 policy. Applicant An applicant is the person applying for an insurance policy. Attained Age Attained age is the insured s age on the issue date, plus the number of years the policy has been in force. Beneficiary A beneficiary is the person who will receive the death benefit of the Term Life 1000 policy if the insured dies while it is in force. Contestable Period The contestable period (also called the period of contestability) is the period of time during which an insurance company can contest a policy or deny a claim for any material misrepresentation of fact on an application. (Colonial Life s period of contestability is two years in most states.) Contingent Owner The contingent owner is the person to whom ownership of the policy will pass if the owner dies before the insured. If no contingent owner is named, ownership of the policy will pass to the owner s estate. Convertible Term Insurance Convertible term insurance is a term life insurance policy that may be exchanged for a cash value life insurance policy without evidence of insurability. The new premium rate is usually based on the age of the insured at the time of conversion, and the face amount of the new policy cannot exceed the face amount of the term policy being converted. Coverage Effective Date Coverage effective date is the day when coverage under the policy is put in force. It may or may not precede the premium effective date. 16

24 Death Benefit The death benefit (also called the proceeds of the policy) is: The amount payable to the beneficiary when the insured dies while the Term Life 1000 policy is in force. Equal to the policy s face amount shown on the Policy Schedule, minus any due and unpaid premiums and any amount advanced to the policyowner in an earlier payment. Evidence of Insurability Evidence of insurability is any statement or proof of a person s physical condition and/or other factual information affecting acceptability for insurance. Grace Period A grace period means a specified period of time allowed for insureds to pay their policy premium. After insureds have paid the first premium, they have a 61-day grace period in which to pay any premium due. The grace period begins on the due date of the premium and ends 61 days later. The policy remains in force during the grace period. Inspection Report An inspection report is a report made by a consumer reporting agency concerning the proposed insured s personal life, activities, occupation, and economic standing. Insurable Interest Insurable interest is a person s or party s interest financial or emotional in the continuing life of the insured. 17

25 Insured Child To be considered an insured child, the child must be the insured s: Natural child, Stepchild, or Adopted child, including a child placed with the insured for the purpose of adoption, or Any other child related to the insured by blood or marriage (unless either of the child s parents also resides with the insured). On the day Colonial Life issues the rider, the insured child must be: At least 14 days of age; Living with the insured in a regular parent-child relationship and dependent on him for support and maintenance; Under the age of 19; and Unmarried. Each child who meets these conditions becomes an insured child and remains so until reaching age 25. We consider an insured child to be age 25 on the policy anniversary after his 25 th birthday. Insured Spouse An insured spouse is the person married to the insured on the issue date of the Spouse Term Rider and named on the rider schedule page. Payer A payer is the person paying the premium for an insurance policy. It can be someone totally different from the applicant, proposed insured, or policyowner. Physician A physician means a person, who is licensed by the state to practice a healing art and performs services that are allowed by his license. Physician does not include any insured or owner or anyone related to any insured or owner by blood or marriage, a business or professional partner of any insured or owner, or any person who has a financial affiliation or business interest with any insured or owner. Policy Anniversary Policy anniversary occurs annually on the same date and in the same month as the premium effective date shown on the Policy Schedule page. 18

26 Policyowner A policyowner is the person who may exercise all rights described in the policy while the insured is alive, such as the right to make changes and designate beneficiaries. Public Conveyance (Accidental Death Benefit Rider) A public conveyance means a commercial aircraft, train, streetcar or motor vehicle being operated by a licensed common carrier or taxicab company for passenger service. Reinstatement Reinstatement occurs when a policy is put back in force. If an insured s policy ends after a grace period, they have the right to ask us to reinstate the policy, as well as any riders on the life of the insured attached to the policy. (Colonial Life will consider doing this within five years of the date coverage stopped, provided that the insured is still alive.) Rider A rider is a special provision or group of provisions that may be added to a policy to expand or limit the benefits. Spouse Term/Children s Term Rider Beneficiary The insured of the base policy is automatically the insured spouse s or children s beneficiary unless the policyowner changes the beneficiary by an endorsement. Standard Risk Standard risk applies to those applicants who are considered at normal risk and who meet the company s insurability requirements, thereby falling within a normal premium pricing range. Term Life Insurance Term life insurance is life insurance having a death benefit that is payable only if the insured dies within the period of time the policy is in force. Nothing is payable if the insured lives to the end of the period of time specified. This type of insurance does not build cash or other nonforfeiture. Terminal Illness A terminal illness is an injury or sickness that results in the insured having a life expectancy of 12 months or less (24 months in some states) and from which there is no reasonable prospect for recovery. 19

27 Total Disability (Waiver of Premium Rider) Total disability, during the first two years of disability, means that, due to bodily injury or sickness, the insured: Is unable to perform the substantial and material duties of his regular occupation; Is not, in fact, working at any job; and Is under the care of a physician for the related disability. Total disability, after two years of disability, means the insured: Is unable to perform the duties of any gainful occupation for which he is qualified by reason of education, training, or experience; Is not, in fact, working at any job; and Is under the care of a physician for the related disability. A total disability will be considered permanent when it has continued with no interruptions for at least six consecutive months. For some conditions, we will consider the insured to be totally and permanently disabled as long as the condition continues even if he is able to work. These conditions are the total, permanent and irrecoverable loss of: The sight of both eyes; or The use of both hands or both feet; or The use of one hand and one foot. Recurrent Disability A recurrent disability is a period of total disability due to the same or related cause as that of a prior period of total disability. If less than 30 days have passed from the end of the prior period to the date the current total disability began, we will consider it to be a continuation of the prior period. If 30 days or more have passed, we will consider it to be a new period of total disability. Universal Life Insurance Universal life insurance is a form of cash value life insurance characterized by flexibility in face amounts and premium payments. Cash values earn interest based on a current credited interest rate. Whole Life Insurance Whole life insurance is a traditional form of cash value life insurance that provides guaranteed level premiums, guaranteed cash values, and guaranteed death benefits. 20

28 Base Plan Benefits Benefits and features are the same for payroll deduction and non-payroll deduction (individual) sales. Note that underwriting guidelines are different for non-payroll sales. Term Life 1000 has three base plan options available for the employee and spouse: year level term year level term year level term. Each option provides coverage for the term specified with guaranteed level premiums. Coverage may be renewed annually thereafter without evidence of insurability. Term Life 1000 provides a $10,000 minimum face amount with no maximum face amount, based on underwriting. Death benefits are sold in $1,000 increments. In addition, this product features: Level death benefits and guaranteed premiums. For the selected term of the policy, the premiums will not increase and the death benefit will not decrease. After the end of the initial term period, premiums will increase annually at a guaranteed rate based on the insured s age. Guaranteed renewable coverage to age 80. A wide spectrum of issue ages for an employee and spouse: 15-70, 10-year term , 20-year term , 30-year term. 21

29 Accelerated Death Benefit Provision The Accelerated Death Benefit Provision is automatically included with all Term Life 1000 policies. It allows the owner to receive an advance of up to 75 percent of the policy s death benefit, not to exceed $150,000 if the insured is diagnosed with a terminal illness. Terminal illness means an injury or sickness resulting in the insured having a life expectancy of 12 months or less, from which there is no reasonable prospect for recovery. Payment of this benefit will be made only once. The minimum payment shall not be less than the lower of 25% of the policy face amount or $50,000. The provision is automatically included on all employee and spouse policies, but is not available on either the Children s Term Rider or Spouse Term Rider. There is no additional premium for this provision. However, the requested death benefit advance amount payable to the policyowner is calculated, then reduced by: Any due but unpaid premiums; and The administrative charge in effect at the time the option is exercised, not to exceed $200. The remaining sum is discounted for a time period of one year using an interest rate not to exceed the greater of the then current yield on 90-day Treasury Bills available at the date of application for an accelerated payment; or Moody s Corporate Bond Yield averages - Monthly Average Corporates published by Moody s Investors Services, Inc. or any successor thereto for the calendar month ending two months before the date of the application for an accelerated payment. If an Accelerated Death Benefit is paid on the policy, no new coverage can be added to the policy. If the insured survives beyond the then level premium period, the coverage continues as yearly renewable term (YRT) coverage. Any premium due after payment of the benefit is waived until the insured dies or on the policy anniversary date following the insured s age 80. The Company will waive the premium for the policy and any attached riders if the Accelerated Death Benefit is paid. The waiver will continue for the remaining life of the policy, provided that, if the insured is still living after 12 months, the Company reserves the right to investigate his health condition to determine if the policy should remain on waiver or if premium payments should resume. The benefit paid under this provision may be taxable or may affect eligibility for benefits under state or federal law. Insureds should consult their tax advisor to assess the impact of this benefit. Benefits paid under the terms of this provision will reduce the death benefit of the policy. 22

30 Accelerated Death Benefit Disclosure Form New York has passed regulatory requirements concerning disclosure at the point-ofsale of the effect that acceleration of the death benefit has on life insurance policies. To address these regulatory requirements, an Accelerated Death Benefit Disclosure Form must be completed and signed at the point-of-sale for Term Life 1000 policies. This form discloses the effect on the policyowner s life insurance policy when an accelerated payment is made due to the terminal illness of the insured. New York requires the Accelerated Death Benefit Disclosure Form (form 97580), which can be ordered from Field Supplies, ext Give a copy of the completed form to the applicant and send a copy to the administrative office with the application. 23

31 Optional Riders Available in most states. State versions of the features and guidelines may apply. Refer to your state s policy for complete details. In addition to the base plan benefits, Term Life 1000 offers the following optional riders: and 20-year Spouse Term Riders. 2. Children s Term Rider. 3. Accidental Death Benefit Rider. 4. Waiver of Premium Rider. The riders may not be sold separately from the base plans. Spouse Term Riders 10-year Rider $10,000-$50,000 face amounts. (Available with a 10-, 20- or 30-year term employee policy only.) 20-year Rider $10,000-$50,000 face amounts. (Available with a 20- or 30-year term employee policy only.) An insured spouse is the person married to the insured on the issue date of the Spouse Term Rider and named on the rider schedule page. Both Spouse Term Rider options provide a level death benefit for the designated 10- or 20-year term period, with guaranteed level premiums. A Spouse Term Rider may be added to an employee policy only. Coverage is available in $1,000 increments and amounts cannot exceed the face amount of the base policy. Following are summaries of the riders guidelines: Term Period: Spouse Issue Ages: Issue Amounts: Rates: 10-year Spouse Term Rider $10,000-$50,000 Unisex, uni-tobacco, and age-rated Term Period: Spouse Issue Ages: Issue Amounts: Rates: 20-year Spouse Term Rider $10,000-$50,000 Unisex, uni-tobacco, and age-rated A spouse signature is not required for either term rider. 24

32 Right to Convert in the Event of Suicide of the Insured If the coverage under the policy to which this rider is attached ends due to the suicide of the insured, the insured spouse may convert this rider without evidence of insurability, subject to the conditions described below. It may be converted within 31 days to any life insurance plan offered by the Company to individuals at the age of the insured spouse at the time of the conversion. The face amount of the new policy may not exceed the face amount of the rider shown on the Rider Schedule. Premium for the new policy will be based both on the premium rates then in use for the new plan, and on the age of the insured spouse on the conversion date. Additional benefits may be added to the new policy only with the Company s consent. The contestable and suicide provisions of the new policy will be measured from the effective date of the rider. Waiver of Premium Rider (as it affects the Spouse Term Riders) A waiver of premium rider purchased on the base policy also waives premiums for this rider if the employee becomes disabled. Children s Term Rider $1,000 to $10,000 face amounts The Children s Term Rider provides level term life insurance for all eligible children of the primary insured who meet the definition of an insured child in the rider. To be considered an insured child, the child must be the insured s: Natural child, Stepchild, or Adopted child, including a child placed with the insured for the purpose of adoption, or Any other child related to the insured by blood or marriage (unless either of the child s parents also resides with the insured). On the day Colonial issues the rider, the insured child must be: At least 14 days of age; Living with the insured in a regular parent-child relationship and dependent on him for support and maintenance; Under the age of 19; and Unmarried. 25

33 Each child who meets these conditions becomes an insured child and remains so until reaching age 25. We consider an insured child to be age 25 on the policy anniversary after his 25 th birthday. The rider may be added to either the employee policy or a spouse policy, but not both. One level unisex, uni-tobacco rate covers all insured children. Future children (born, legally adopted, or stepchildren acquired through marriage of the primary insured) are covered when a new parent-child relationship is established. A new parent-child relationship is established: By a newborn child attaining 14 days of age; By the legal adoption of a child under the age of 19; and When the insured marries and acquires a stepchild who is less than 19 years of age. The Children s Term Rider coverage amounts are issued in 1 to 10 units (1 unit = $1,000 on all children), with a minimum face amount of $1,000 and a maximum of $10,000. The rider s face amount cannot exceed the face amount of coverage issued by the Company on the primary insured. Coverage ends for each insured child on the first to occur of the following dates: The policy anniversary date after the insured s 65 th birthday. The policy anniversary date after the child s 25 th birthday. The date the coverage under the policy to which the rider is attached ends. The date that the Company receives written request for termination. If the primary insured dies while this rider is in force, we provide paid-up term insurance for each child equal to the face amount of the existing Children s Term Rider. The insurance on each child then continues at no cost until age 25. It is the insured s responsibility to notify our administrative office if any child no longer qualifies as an insured child. If all of the insured children no longer qualify, and the insured does not notify us, the extent of our liability will be to refund premium for the time period for which they did not qualify. New York Endorsement of the Children s Term Rider The Children s Term Rider provides that the amount of the benefit paid upon the death of an insured child may be reduced in certain situations below the face amount purchased. In the event that an insured child dies prior to age 14 years and 6 months, the amount payable to the beneficiary shall be limited to the amount which, together with the amount of life insurance under any other policy or policies then in force upon the life of the insured child, equals $25,000 or 50 percent of the amount of life insurance in force on the life of the applicant for the insurance on the insured child at the date of issue of this rider, if greater. If the insured child is under the age of four years and six months at the time of his or her death, the 50 percent limit indicated above shall be reduced to 25 percent. In no event, shall the amount payable exceed the face amount shown on the Rider 26

34 Schedule. Any portion of the face amount shown on the Rider Schedule that exceeds the above stated limits shall not be valid or payable as a claim as a result of the death of the insured child prior to the age of 14 years and 6 months. We will refund, with interest (at the rated assumed in valuation of this rider) the prorata portion of the premiums paid on any portion of the face amount that is in excess of the limit set out in these paragraphs. Waiver of Premium Rider (as it affects the Children s Term Rider) If the policy to which this rider is attached includes a Waiver of Premium Rider, the premium due on the base policy and the Children s Term Rider is waived during the total disability of the insured under the base policy. Accidental Death Benefit Rider $150,000 maximum The Accidental Death Benefit (ADB) Rider provides an additional benefit equal to the face amount issued under the policy in the event the insured dies as a direct result of accidental bodily injury before age 70, while the rider is in force, provided that the risk is not excluded. The Accidental Death Benefit amount doubles if the injury occurs while the insured is a fare-paying passenger on a public conveyance.* *Public conveyance means a commercial aircraft, train, streetcar or motor vehicle being operated by a licensed common carrier or taxicab company for passenger service. The ADB benefit increases by 25 percent if an insured dies from accidental bodily injuries sustained in an automobile accident (non-commercial) while driving with a current and valid drivers license or riding in a private passenger vehicle and while properly wearing a seatbelt. The rider may be sold with employee and spouse policies only when the original base policy is purchased. It cannot be added to an existing policy. To qualify for coverage, employees and spouses must be between the ages of The ADB Rider face amount must equal the base policy s face amount, up to a maximum of $150,000. A base policy over $150,000 will have the maximum ADB Rider amount of $150,000. Coverage is based on $1,000 increments. The maximum amount of coverage from ADB Riders on all life plans is $300,000. Termination of the ADB Rider will occur on the earliest of the following dates: The policy anniversary date following the insured s 70th birthday. When the base policy terminates. When the Company receives a written request from the owner to terminate the rider. The date a grace period ends without payment of premiums for the rider. 27

35 Waiver of Premium Rider The Waiver of Premium Rider states that if an insured is totally and permanently disabled, premium payments for the base policy and all riders are waived for the duration of the disability. Premiums are waived only if a disability occurs prior to the policy anniversary following the insured s 65th birthday. A total disability is considered permanent when it has continued with no interruptions for at least six consecutive months. The rider can only be purchased at the original issue of the base policy. It cannot be added to an existing policy. The rider is available with the employee and spouse policy, based on underwriting. To qualify, applicants must be between the ages of During the first two years of disability, total disability means that, due to bodily injury or sickness, the insured is: Unable to perform the substantial and material duties of his/her regular occupation; and Not, in fact, working at any job for pay or benefits. After the first two years of disability, total disability means the insured is: Unable to perform the duties of any gainful occupation for which he/she is qualified by reason of education, training, or experience; and Is not, in fact, working at any job for pay or benefits. For some conditions, the Company considers the insured to be totally and permanently disabled as long as the condition continues, even if he/she is able to work. These conditions are the total, permanent and irrecoverable loss of: Sight of both eyes; or Use of both hands or both feet; or Use of one hand and one foot. Premium amounts for the Waiver of Premium Rider remain level for the life of the policy. Once an insured is no longer totally disabled or if the insured fails to provide proof of the continuing disability, then the policy s premiums must be paid to keep the policy in force. 28

36 Policy Exclusions Base Policy and Spouse Term Riders If the insured dies by suicide within two years from the coverage effective date of the policy, the amount payable by the Company in place of all other benefits will be the sum of the premiums paid, without interest. Accidental Death Benefit Rider We will not pay benefits for death that results directly or indirectly from: Involvement in any period of armed conflict, even if it is not declared; or Suicide: or Disease of the body or mental infirmity; or Participating or attempting to participate in an illegal activity; or The use of any drugs, poisonous substance, intoxicant or narcotic, except any drugs taken as prescribed by a physician. Accidental exposure to any poisonous substance will not be excluded; or Flying other than as a fare-paying passenger on a regularly scheduled commercial flight; flying as a student or private pilot; jumping, parachuting, or falling from any aircraft including those that are not motor driven; or hot air ballooning, hang gliding, or flying ultralights; or Engaging in auto, motorcycle or boat racing or scuba diving. Waiver of Premium Rider No premium is waived or refunded if total disability: Results directly from any willfully and intentionally self-inflicted injury. 29

37 Eligibility Guidelines Account The account eligibility guidelines are as follows: Coverage is marketable to all accounts, unless prohibited in the New Account Manual. When writing coverage in a Special Markets account, refer to the Special Markets guidelines provided by the New Account Set-Up Unit. Term Life 1000 is available for payroll deduction accounts, individual pay accounts (IPG), and non-payroll deduction (individual) sales. For payroll-deduction accounts, the level of underwriting is based on the policy s face amount and issue age of the applicant. For non-payroll sales, full underwriting is required regardless of the policy s face amount. The minimum account size is three payers. Administrative office approval is not required for new or existing accounts. Employee An employee is eligible for coverage if he or she: Is actively employed on a full-time basis (20+ hours per week); employed with present employer for at least 90 days; and actively at work on the date of the enrollment. Meets the issue age requirements of: 15 70, 10-year Term , 20-year Term , 30-year Term , Accidental Death Benefit Rider , Waiver of Premium Rider. Spouse and Dependent Children Spouse Policy A spouse is eligible for a policy if he or she: Is the spouse of an employee. Is actively employed, or not disabled or unable to work, at the time of application. Meets the issue age requirements of: 15 70, 10-year Term , 20-year Term , 30-year Term , Accidental Death Benefit Rider , Waiver of Premium Rider. 30

38 A spouse can apply for a policy even if the employee does not apply for a Term Life 1000 policy. Spouse Term Riders A spouse is eligible for one of the Spouse Term Riders if he or she: Is the spouse of an employee. Is actively employed, or not disabled or unable to work, at the time of application. Meets the issue age requirements of: 15 65, 10-year Term Rider , 20-year Term Rider. A Spouse Term Rider is not available with a spouse policy. Children s Term Rider Dependent children are eligible for coverage if they: Meet the issue age requirements of 14 days -18 years. Meet the definition of an insured child. Other Rider Eligibility To purchase a policy rider, applicants must qualify for a base Term Life 1000 policy before meeting the appropriate rider eligibility guidelines. Accidental Death Benefit Rider Applicants are eligible for the Accidental Death Benefit Rider if they: Qualify for a base Term Life 1000 policy. Meet the issue age requirements of for employees and spouses. Waiver of Premium Rider Applicants are eligible for the Waiver of Premium Rider if they: Qualify for a base Term Life 1000 policy. Meet the issue age requirements of for employees and spouses. Aggregating Coverage These are the in-force products that the Company aggregates (combines all units as a whole) to determine the level of medical requirements when applying for new policies: Level Term Life. Term Life

39 Add the total face amounts of all aggregated coverage to determine the medical requirements. Use the Life Medical Requirements Chart by applying the total face amount and current age. The level of underwriting questions (simplified issue or full underwriting) on the application would be for the face amount applied for on the Term Life 1000 product only. Examples Insured has a $100,000 Level Term Life plan and is applying for a $100,000 Term Life 1000 plan. His current age is 45. For $100,000, the questions on the application would be simplified issue. The medical requirements would be based on $200,000, total face amount at age 45. This would require Blood, HOS and Vitals. Insured has a $150,000 Level Term Life plan and is applying for a $150,000 Term Life 1000 plan. His current age is 52. For $150,000, the questions on the application would be full underwriting. The medical requirements would be based on $300,000, total face amount at age 52. This would require a Paramed, Blood, HOS, and EKG. Aggregating Spouse Term Riders The maximum amount of coverage available from Spouse Term Riders on all life plans is $50,000. Complete the appropriate sections of the Life App 06 along with eligibility question #3, AIDS, Height & Weight and Simplified Issue Section. Example An insured is covered with a $15,000 spouse rider on a Level Term Life policy. The maximum available on a Spouse Term Rider with a Term Life 1000 policy is $35,000. Aggregating Accidental Death Benefit Riders The maximum amount of coverage available from Accidental Death Benefit Riders on all life plans is $300,

40 Underwriting Guidelines NOTE: Always check New York s underwriting guidelines for specific forms and procedures. They are based on Insurance Department rules and regulations. Life App 06 Use the Life App 06 for New York. Term Life 1000 is available with three premium rate bands for employees and spouses. Face amounts are sold in $1,000 increments. The spouse s signature is required on an individual tobacco distinct spouse policy above $10,000. The application will be signed by the employee as the applicant on policies with face amounts of $10,000. Additional Forms In addition to the Life App 06, the following forms may be required at the point of sale. Form: Agent s Report Conditional Receipt, form NOTICE-NY regarding MIB, Fair Credit Reporting Act, Compliance and Privacy, form Underwriting Authorization (HIPAA) Form, form HIV Consent Form, form Accelerated Death Benefit Disclosure Form, form Requirement: Required for all fully underwritten applications. Required only if money is collected with the application. (Indicate on the application the amount of money remitted with the app in the Agreement Section.) Form must be distributed to all applicants at the pointof sale. A copy is not required to be sent back to the administrative office. Completed form is required with each application. Signed and dated form must accompany all applications that require a blood profile. Completed and signed form required at the point-ofsale. Life Buyer s Guide, form Definition of Replacement Form, form Leave a copy of the form with the applicant and send a copy to the administrative office with the application. Form must be distributed to all applicants at the pointof-sale. Completed and signed form required at the point-ofsale with all applications, even if the applicant is not replacing coverage. 33

41 Levels of Underwriting Term Life 1000 is available for payroll deduction sales on a post enrollment guaranteed issue (PEGI), simplified issue, and fully underwritten basis. Non-payroll deduction (individual) sales are available on a fully underwritten basis only. For all levels of underwriting, complete the following sections of Life App 06: Proposed Insured Employee Billing Beneficiary Spouse and/or Dependent Child Rider (if applicable) Eligibility Questions Plan Life Adjustment (if applicable) Replacement AIDS Height & Weight Agreement (city, state, date of application, and all appropriate signatures Agent (Replacement Questions, date and signature, code number). Based on state requirements, you may be asked for additional information, such as your license number. Note: At this time, the Company has made a business decision not to accept replacements because of the complexity of New York replacement regulations. 34

42 The level of medical underwriting required for applicants is defined by age and face amounts within three bands. These bands (1, 2 and 3) represent premium breaks at set face amounts. Premiums are more competitive in each subsequent band. Following are the questions and sections required for each level of underwriting available with this product. Premium Breaks Underwriting Levels Band 1 Simplified Issue $10,000-$100,000 Issue Ages: $10,000-$100, $10,000-$75, $10,000-$50,000 Full Underwriting Issue Ages: N/A $75,001-$100, $50,001-$100,000 Band 2 All Issue Ages $100,001-$250,000 Band 3 $250,001 Full Underwriting All Issue Ages Full Underwriting Post Enrollment Guaranteed Issue (PEGI) Administrative office approval is not required for new or existing accounts. Minimum account size is 100+ eligible employees. Available only at the initial Term Life 1000 enrollment and to new hires at subsequent enrollments. Participation requirement is the greater of 25 adult (employee/spouse) applications or 20 percent participation. Other life coverage does not count toward participation. Employee (PEGI) All simplified issue (SI) health questions are asked when enrolling employees in all accounts. If participation is met, the Company will issue coverage to all employees regardless of health. If participation is not met, coverage will be issued to qualifying applicants. 35

43 EMPLOYEE (PEGI) Employee Issue Ages lives lives lives 2 x salary to $50,000 1 x salary to $50,000 1 x salary to $25,000 3 x salary to $75,000 3 x salary to $50,000 2 x salary to $25,000 3 x salary to $100,000 3 x salary to $75,000 2 x salary to $25,000 Spouse (PEGI) All simplified issue (SI) health questions are asked when enrolling spouses in all accounts. If participation is met, the Company will issue coverage to all spouses regardless of health. If participation is not met, coverage will be issued to qualifying applicants. A spouse signature is not required for the $10,000 face amount. SPOUSE (PEGI) Spouse Issue Ages lives lives lives $10,000 $10,000 $25, $10,000 $10,000 $10, $10,000 $10,000 $10,000 Simplified Issue (SI) Simplified issue requires completion of the AIDS section, Height and Weight and health questions 7-11 under the Simplified Issue section of the application. Blood profiles and medical exams are not required, but may be requested by underwriting if necessary. Full Underwriting Payroll Deduction Sales Full underwriting requires completion of the AIDS section, Height and Weight and health questions under the Full Underwriting section of the application. Blood profiles, HOS, medical exams, doctor s records, inspection reports, motor vehicle reports, and other information may be requested by underwriting to determine insurability. 36

44 Medical Requirements Payroll Deduction Sales Face Amounts Ages Ages Ages Ages $50,001- $100,000 Non-Med Non-Med Non-Med Paramed, HOS $100,001- $150,000 Non-Med Blood, HOS, Vitals Blood, HOS, Vitals Paramed, Blood, HOS, EKG $150,001- $250,000 Blood, HOS, Vitals Blood, HOS, Vitals Blood, HOS, Vitals Paramed, Blood, HOS,EKG $250,001- $500,000 Paramed, Blood, HOS Paramed, Blood, HOS, EKG Paramed, Blood, HOS, EKG MD exam, Blood, HOS, EKG $500,001- $5M MD exam, Blood, HOS, EKG MD exam, Blood, HOS, EKG MD exam, Blood, HOS, EKG MD exam, Blood, HOS, EKG 37

45 Unisex Height and Weight Chart Payroll Deduction Sales If the proposed insured s weight exceeds the maximum listed in the following chart for face amounts of $10,000-$100,000 (Band 1) and face amounts of $100,001-$250,000 (Band 2), the application will be declined. At $250,001+ (Band 3-full underwriting), a proposed insured may be offered a rated policy based on height and weight (Band 1 maximums) and/or other health conditions. For the Spouse Term Rider, if the proposed spouse s weight exceeds the maximum listed in the chart for face amounts of $10,000 - $50,000, the rider coverage will be declined. Height Ft. In. Weight Maximum for Band 1 face amounts Weight Maximum for Band 2 face amounts 4' 10" ' 11" ' 0" ' 1" ' 2" ' 3" ' 4" ' 5" ' 6" ' 7" ' 8" ' 9" ' 10" ' 11" ' 0" ' 1" ' 2" ' 3" ' 4" ' 5" ' 6" ' 7" ' 8" ' 9" For heights less than 4'10", subtract 5 lbs. for each inch difference. For heights greater than 6'9", add 8 lbs. for each additional inch. 38

46 Full Underwriting Non-Payroll Deduction (Individual) Sales For non-payroll deduction (individual) sales, submit the application on an annual, semi-annual, quarterly, or bank draft method of payment. For bank drafts, include the appropriate bank draft authorization and a copy of a voided check with the first modal premium. Do not submit premium for face amounts over $250,000. A separate sales summary will not be required for each application. Several families can be added to one sales summary. The exception is payroll and non-payroll sales cannot be on the same sales summary. Full underwriting requires completion of the AIDS section, Height, Weight and health questions 12-20* under the Full Underwriting section of the application. Blood profiles, HOS, medical exams, doctor s records, inspection reports, motor vehicle reports, and other information may be requested by underwriting to determine insurability. For non-payroll sales of both employee and spouse policies, use the employee plan codes for payroll sales listed in the Term Life 1000 Rate Book. *Answer all questions listed under the specific section of the application, based on the age of the applicant and the face amount applied for. Medical Requirements Non-payroll Deduction (Individual) Sales Face Amounts $50,001- $100,000 Ages Non-Med $100,001- $150,000 Blood, HOS,Vitals Ages Non-Med Blood, HOS, Vitals Ages Paramed, HOS Blood, HOS, Vitals Ages Paramed, HOS, Blood Paramed, Blood, HOS, EKG $150,001- $250,000 Blood, HOS, Vitals Blood, HOS, Vitals Blood, HOS, Vitals Paramed, Blood, HOS,EKG $250,001- $500,000 Paramed, Blood, HOS $500,001- $5M MD exam, Blood, HOS, EKG Paramed, Blood, HOS, EKG MD exam, Blood, HOS, EKG Paramed, Blood, HOS, EKG MD exam, Blood, HOS, EKG MD exam, Blood, HOS, EKG MD exam, Blood, HOS, EKG 39

47 Unisex Height and Weight Chart Non-Payroll Deduction (Individual) Sales Height Weight Ft. In. Maximum for Bands 1, 2 & 3 4' 10" 173 4' 11" 179 5' 0" 186 5' 1" 192 5' 2" 199 5' 3" 206 5' 4" 212 5' 5" 217 5' 6" 225 5' 7" 230 5' 8" 238 5' 9" 245 5' 10" 251 5' 11" 258 6' 0" 265 6' 1" 274 6' 2" 281 6' 3" 289 6' 4" 297 6' 5" 304 6'6" 312 6' 7" 321 6' 8" 328 6' 9" 337 Financial Underwriting There are many factors used to determine insurability of a person for life insurance. In most situations, it involves the proposed insured s age, physical/health history, occupational hazards, drug and alcohol use, moral hazards, and risks associated with avocations and aviation. Most proposed insureds demonstrate a clear need for the requested amount of coverage; however, in some situations involving larger face amounts, the amount requested may seem inappropriate or at least warrant further investigation of the proposed insured s financial status. Financial underwriting means reviewing the proposed insured s net worth, income, financial stability and reputation. The financial picture of the proposed insured relates directly to the presence of insurable interest and the agent s and underwriter s ability to determine whether the amount of coverage applied for at the time of underwriting can be justified. A beneficiary should not benefit more financially from a proposed insured s death than he or she would have if the insured had lived. Excessive coverage in relation to need can be an indication of speculative intent. 40

48 During the application process, the sales representative has a responsibility to determine, along with the client, the amount of coverage needed to protect income and wealth. The writing representative is always the first person involved in gathering information to send to the administrative office underwriter to review. Below is a multiple of income factor table that provides a general guide for determining how much life insurance seems reasonable based on a proposed insured s income. Age Multiple of Income Factor < > 65 Individual Consideration In any situation, it is important to provide the underwriter with information when the financial data may not support the amount applied for by the proposed insured. For instance, you may have a single, 35-year-old individual with an income of $30,000 and a limited net worth. The multiple of income factor of 15 listed in the previous chart may be overstated for this person. On the other hand, consider a 35-year-old married individual with three children, an income of $30,000, and a substantial net worth. In this situation, the multiple of income factor of 15 may be understated. Call your underwriter to discuss these types of cases as they occur. In addition to personal insurance needs, you may encounter situations regarding business insurance, key man coverage, or trusts and charitable donations. In these cases, the underwriter will always ask for additional financial information, including corporate financial statements, a history of charitable donations, and other documents that will substantiate the purpose for the insurance. It would be helpful to send a cover letter and substantiating documents or, if possible, record your explanation of the purpose of the insurance application. You may also contact your underwriter to discuss the individual situation. Medical Examinations If an application requires an exam, the administrative office will order it or if you prefer, you can contact one of the approved paramedical companies and order the exam yourself. If you are handling the order, you must consider existing Company coverages when determining the medical requirements. Indicate in the Agent s Report who should be handling the ordering process. The examination includes a medical history assessment, height and weight information, blood pressure check, urinalysis and pulse check. An approved paramedical facility must be used for the exam. The proposed insured s personal physician cannot be used. 41

49 For paramedical exams, use one of the following companies: ExamOne (preferred). American Para Professional Systems (APPS). Hooper-Holmes, Inc. (Portamedic). Check local directories in your area for telephone numbers. Blood Profiles Blood profiles are done by the paramedical facility and are required based on face amount and age guidelines. However, the Underwriting department reserves the right to request any medical information necessary to complete the underwriting process. If you are ordering blood work, state regulations require a HIV Consent form be completed, signed and dated. Give the second and third copies of this three-part form to the proposed insured and mail the original copy to the administrative office. The proposed insured gives a copy to the examiner before blood is drawn. Attending Physician Statement (APS) The APS (a copy of the proposed insured s medical records) can clarify the medical condition, the severity of the disorder, the type of treatment and the degree of control attained. The age and amount of insurance applied for will sometimes affect the need for an APS. If the proposed insured s doctor is listed as Kaiser, a special authorization form is required. Call the administrative office to obtain a copy of this form. Inspection Reports An inspection report is a report made by a consumer reporting agency concerning the proposed insured s personal life, activities, occupation, and economic standing. The information contained in an inspection report is extremely important to underwriters when they deal with questions regarding finance, insurable interest, moral hazard, and other areas of insurability. The Underwriting Department orders inspection reports based on the applicant s age and the face amount of the policy for which he is applying. These reports are usually associated with larger face amount and/or business insurance policies. Motor Vehicle Reports A motor vehicle report is a report listing all traffic violations including a DUI (driving under the influence) and DWI (driving while intoxicated). A motor vehicle report will be ordered when a proposed insured answers yes to the driving question on the application and/or certain face amounts. 42

50 Questionnaires Questionnaires may be needed to clarify avocations and/or aviation histories. Aviation cases can be issued as applied for, rated, or excluded from the coverage. Avocations can be issued as applied for, rated, or declined. Other questionnaires regarding health may be needed during the underwriting process and will be mailed to you with instructions to have the proposed insured complete and sign. These questionnaires will be made part of the policy contract when issued. Additional Coverage/Riders Accelerated Death Benefit Provision The Accelerated Death Benefit is automatically included on all policies and no additional premium is required. New York s Accelerated Death Benefit Disclosure Form must be completed and signed at the point-of-sale for term life policies. Leave a copy of the form with the applicant and send a copy to the administrative office with the application. Accidental Death Benefit Rider The Accidental Death Benefit (ADB) Rider is available with employee and spouse policies at the time of original issue. It cannot be added to an existing policy. For base policies up to $150,000, the ADB Rider s face amount equals the policy s face amount. For base policies greater than $150,000, the rider s maximum face amount is $150,000. The maximum amount of coverage available from ADB riders on all life plans is $300,000. Waiver of Premium Rider The rider is available for an additional premium and can be added only at the time of original issue. It cannot be added to an existing policy. Health questions are not required for the employee. It is available for a spouse only at the full underwriting level. Premium amounts for the Waiver of Premium Rider remain level for the life of the policy. Once the insured is no longer totally disabled, fails to submit to a requested examination, or fails to provide proof of the continuing disability, then the policy s premiums must be paid to keep the policy in force. Spouse Term Rider The 10-year Spouse Term Rider is available on employee policies with a 10-, 20-, or 30-year term period. The 20-year Spouse Term Rider is available on employee policies with a 20- or 30- year term period. A spouse term rider is only available on employee policies. 43

51 Applicant must answer simplified issue health questions and eligibility questions. The minimum face amount is $10,000 and the maximum is $50,000. (Refer to the Aggregating Spouse Term Riders section on page 32 for aggregation guidelines.) The face amount of the Spouse Term Rider cannot exceed the face amount of the base policy. Children s Term Rider The rider may be added to either the employee policy or a spouse policy, but not both. If the children are already covered under an existing policy for $10,000, they cannot have a Children s Term Rider on the new policy unless the existing policy is being replaced. Signatures The application must be signed and dated and the place of dating must be completed. Proposed Insured (the person covered by the policy) The proposed insured must sign the application. (Exception: If the proposed insured is the spouse of the employee, he does not have to sign for face amounts of $10,000. All other amounts require a signature by the spouse or proposed insured.) Owner (the person who owns the policy and has the right to make changes and designate beneficiaries) Owners must sign the application as owner, if different than the proposed insured. Coverage Effective Dates If you collect the initial premium and the Company issues the coverage as it was applied for, the effective date is the date of the application or the coverage effective date of the account, whichever is later. When you do not collect an initial premium, the coverage takes effect only after the policy is issued, the premium is paid, and the policy is delivered to and accepted by the applicant during the lifetime and continued insurability of the proposed insured. Underwriting Authorization (HIPAA) In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA). A portion of HIPAA, known as the Privacy Rule, requires a covered entity to have written authorization from an individual before it can use or disclose the individual s protected health information. 44

52 As part of doing business, the Company obtains protected health information to underwrite policies and get protected health information from other covered entities, such as health care providers. Because of this, we must make our authorizations compliant with the HIPAA Privacy Rule. We have a HIPAA-compliant underwriting authorization, form 97331, which is a separate document from our applications. You must submit one of these authorizations with each completed application, and the authorization must be completed in addition to the signature on the application. An authorization is required with each application, regardless of whether or not the product is covered under the Privacy Rule. To learn more about HIPAA guidelines, logon to ProducerNet and key in HIPAA in the Search field. 45

53 Service Guidelines Service for Individual Policies Routine Service Requests Some of our policyholders routine requests can be handled over the telephone by calling the toll-free customer service number ( ). These include: Name change. Address change. Change of payment method. Request for duplicate of lost policy. Request appropriate forms to apply for the Accelerated Death Benefit Provision. Other Service Requests Other service requests may require a completed Request for Service Form, application and/or additional form. Request for Service Form A Request for Service Form is required when customers want to: Delete a rider. Cancel a policy. Port coverage. The majority of these changes are simple and instructions on the Request for Service Form are easy to follow. Policyholders simply complete the form and mail it to the administrative office using the address indicated on the back of the form. New Application and/or Additional Form A new application and/or additional form is necessary for the following requests, which require additional field service from you: Reinstating a lapsed policy. (Reinstatement Application) Converting a Spouse Term Rider due to suicide of the insured. (New application) Adding a Spouse Term Rider or Children s Term Rider. (New application) Requesting an advance on the policy s death benefit through the Accelerated Death Benefit Provision. (Accelerated Benefit Claim Form) Here are the procedures required to handle these requests. 46

54 Reinstating a Lapsed Policy If a Term Life 1000 policy has ended due to nonpayment of premium after a grace period, the Company will consider reinstating coverage within five years of the date that the coverage stopped, provided that the insured is still alive. This applies to the base policy as well as any riders on the life of the insured attached to the policy. Insureds can request a reinstatement of their Term Life 1000 policy by completing either a Request for Service Form or Reinstatement Application. A Request for Service Form is required to reinstate coverage within the 61-day grace period. (The grace period is a period of time during which unpaid premium must be paid to keep the policy in force. It begins once the insured receives a pending lapse notice from the Company due to nonpayment of premium.) The insured must complete the form and mail it to the address indicated at the bottom of page two. If the Company receives the Request for Service Form after the 61-day grace period has ended, a Reinstatement Application will be sent to the insured to complete. A Reinstatement Application will also be sent when an insured has requested cancellation of a policy. Contact your underwriter if you need additional information regarding a reinstatement. Remember that no increases or decreases to in-force term policies are allowed when coverage is reinstated. Adding a Spouse Term Rider To add rider coverage to an existing policy, check the appropriate rider box(es) and list the existing policy number in the Life Adjustment Section of the Life App 06. Indicate the existing policy s plan code, units, and monthly premium in the Complete for Any Riders Section of the application. To apply for Spouse Term Rider coverage on an employee s policy, complete the Spouse and/or Dependent Child Rider Section. List the name, gender, birth date, relationship and Social Security number. Complete Questions #3 and #4 (if applicable) in the Eligibility Questions Section, AIDS Question #7, Height and Weight and Simplified Issue Sections of the application. A spouse signature is not required to add a spouse rider. A Spouse Term Rider cannot be added to a spouse policy. 47

55 Adding a Children s Term Rider To add rider coverage to an existing policy, check the appropriate rider box(es) and list the existing policy number in the Life Adjustment Section of the Life App 06. Complete the section for children s names and dates of birth. Health information is not required to apply for a Children s Term Rider. Coverage is always guaranteed issue. Changing from Tobacco to Non-tobacco Status Changing from tobacco to non-tobacco user status is not allowed in New York for Term Life 1000 policies at this time. Requesting an Advance on the Policy s Death Benefit If an insured is diagnosed with a terminal illness resulting in the insured having a life expectancy of 12 months or less from which there is no reasonable prospect of recovery, the policyowner may request an advance on the policy s death benefit through the Accelerated Death Benefit Provision. A completed Accelerated Death Benefit Request Form must be submitted to the Claims Department, along with the medical proof of the insured s terminal illness and written consent of any irrevocable beneficiary or assignee. Either you or the policyowner can obtain a copy of the form by calling the Life Claims Department. Service for Claims Filing Procedures If the insured dies, either you or the beneficiary should notify the Life Claims Department immediately by calling the customer service area at Be prepared to provide: Name of deceased. Location of death (city, state). Date of death. Name and address where claim forms are to be mailed. Cause of death. Upon notification, the Life Claims Department will issue the proper forms. To process a death claim, the Life Claims Department requires a completed death claim form, a certified death certificate, and the original policy. If the original policy is unavailable, indicate this information on the claim form. The Company does not require the original policy if the claim is made on a Spouse Term Rider or Children s Term Rider. If medical records or any special reports are needed, such as police and traffic reports, the Life Claims Department will obtain them. 48

56 Processing Claims For accidental deaths, the Life Claims Department may order investigative reports, as well as medical information, to determine the complete circumstances. For a death resulting from suicide, the Life Claims Department may order the medical examiner s/ coroner s report, medical records, and the police report. For accidental death resulting from homicide, the Company always obtains a police report because we need to know the circumstances of the death, including whether or not the beneficiary was involved. Regardless of the cause of death, a claim on a life insurance policy less than two years old requires a routine check to verify that all information given on the original life application is accurate. Even if the death was the result of an accident, we conduct a routine check. Life insurance policies are contestable for two years if incorrect information is given on the application. This means there is a two-year period of time during which the Company may dispute the validity of a policy. Good field underwriting can help protect the company. Carefully asking the questions exactly as written on the application and recording the answers precisely as stated by the applicant will help avoid problems when a claim occurs. If an insured files a claim during the contestable period, the Company will check to see if the information obtained during the claims process is consistent with the original application. If it is determined that the information on the application was not correct, the Underwriting Department will decide whether the policy would have been issued if the correct information had been given. If we determine that the Company would not have issued the policy had the correct information been submitted, the Life Claims Department will reject the claim and refund the premiums. If there is a misstatement in the application of the insured s age or the age of any person insured by rider, we will adjust the benefits payable to the amount of benefits which the premiums paid would have bought at the correct issue age. If, based on the insured s correct age, we would not have issued the policy or any riders, then we will refund the premiums paid. Also, the answer to the tobacco/non-tobacco question on the application is significant information for determining whether to charge tobacco or non-tobacco premium rates. Upon reviewing records involving an insured s death, if the Life Claims Department discovers that the applicant incorrectly answered the tobacco/nontobacco question, the Company will deny the death claim and refund all premiums. The Company does not adjust the policy s face amount when the applicant s tobacco use history has been misrepresented. 49

57 Beneficiary Information The Company pays death benefits to the beneficiary named by the policyowner. Therefore, it is important that a policyowner keep his or her beneficiary information up-to-date. To change a beneficiary, a policyowner should promptly send a completed Beneficiary Designation Form. During routine service visits, ask customers if their beneficiary information is current. It is particularly important for a policyowner to review beneficiary information when a significant event occurs, such as a marriage, divorce, or death of a family member. Keeping this information updated helps avoid problems when a claim occurs. When naming a beneficiary, the policyowner may name a minor. When a claim occurs and benefits are payable to a minor, in most instances the court must appoint a person to receive proceeds on the child s behalf. If the estate is named as beneficiary, the estate administrator must send Letters of Administration to the Company. The Life Claims Department is responsible for seeing that we pay benefits to the proper person. In most situations, beneficiaries can expect a response within two weeks after the claim is received in the administrative office. 50

58 Index Accelerated Death Benefit Disclosure Form, 12, 23, 33, 43 Accelerated Death Benefit Provision, 2, 7, 22-23, 43, 46, 48 Accelerated Death Benefit Request Form, 48 Accidental Death Benefit Rider, 2, 4, 7, 19, 24, 27, 29, 30, 31, 32, 43 account eligibility, 30 adding a Children s Term Rider, 48 adding a Spouse Term Rider, 47 Agent s Report, 33, 41 aggregating coverage, applicant (definition), 16 application guidelines, 4, 15, 34 attained age (definition), 16 attending physician statement, 42 base plan benefits, 2, beneficiary (definition), 16 blood profiles, 42 changing from tobacco to non-tobacco status, 48 Children s Term Rider, 3, 19, 25, 26, 27, 31, 44, 48 New York endorsement, Waiver of Premium (as it affects the Children s Term Rider), 27 claims guidelines, competitive advantages, 6 Conditional Receipt Form, 12,33 contestable period (definition), 16 contingent owner (definition), 16 death benefit (definition), 17 Definition of Replacement Form, 12, 33 definitions, dependent eligibility, 3, 30, 31 eligibility guidelines, account, 30 aggregating coverage, 30, 32 dependent, 3,.3, 30, 31 employee, 3, 30 riders, spouse, 3, evidence of insurability.(definition), 17 exclusions, 29 grace period.(definition), 17 HIV Consent Form, 12, 33, 42 inspection report.(definition), 17 inspection reports, 17, 36, 39, 42 insurable interest (definition), 17 insured child (definition), 3, 18, 25, 26, 31 51

59 insured spouse (definition), 18, 19, 24, 25 Life App 06, 12, 32, 33, 47, 48 Life Buyer s Guide, 12, 33 Life Pre-Approach Insert, 11, 12 market conduct.issues, 15 Market Conduct Issues Training Manual &.Test, 15 NAIC Illustration Regulation, 14, 15 need for life insurance, 1 New York endorsement of Children s Term Rider, Notice-NY Form, 12, 33 optional riders, 2, participation requirements, 2 payer (definition), 18 payment methods, 3 physician (definition), 18 policy anniversary (definition), 18 policy fee, 3 policyowner (definition), 19 portability, 4 positioning, 4-15 assessing the need for life insurance, 11 with other types of life insurance, 9 within the Company s portfolio, 10 within the marketplace, 5-7 post enrollment guaranteed issue (PEGI), 6, 34, public conveyance (definition), 19 quick product summary, 2-4 rates, 3 recurrent disability (definition), 20 regulatory requirement, 14 NAIC Illustration Regulation, 14 reinstatement (definition), 19 renewability, 4, 7 replacements, 15, 34 Request for Service Form, 13, 46, 47 requesting an advance on the policy s death benefit, 48 rider (definition), 19 riders, Accidental Death Benefit Rider, 2, 4, 7, 19, 24, 27, 29, 30, 31, 32, 43 Children s Term Rider, 3, 19, 25, 26, 27, 31, 44, year Spouse Term Rider, 2, 24, year Spouse Term Rider, 2, 24, 43 Waiver of Premium Rider, 2, 4, 7, 12, 20, 24, 27, 28, 29, 30, 31 service guidelines, service for claims,

60 service for individual policies, signatures, 44 simplified issue, 36 spouse eligibility, 3, spouse individual policy, 3, 6, 7, 35, 41 Spouse Term Riders, 3, 24, 25, 29, 31, 32 aggregating coverage, 32 conversion privileges, year Spouse Term Rider, 2, 24, year Spouse Term Rider, 2, 24, 43 Spouse Term/Children s Term Rider beneficiary (definition), 19 standard risk (definition),19 support materials field supplies, support materials ProducerNet, target markets, 2, 5 Term Life 1000 Brochure, 12 Term Life 1000 Rate Book, 12 Term Life 1000 Rate Sheets, 12 term life insurance (definition), 19 terminal illness (definition), 19 total disability (definition), 20 recurrent disability (definition), 20 underwriting authorization (HIPAA), underwriting guidelines, additional coverage/riders, additional forms, 33 attending physician statement, 42 blood profiles, 42 coverage effective dates, 44 financial underwriting, full underwriting, 36, inspection.reports, 17, 36, 39, 42 Life App 06, 12, 32, 33, 47, 48 medical examinations, 41 motor vehicle reports, 42 post enrollment guaranteed issue (PEGI), 6, 34, 35, 36 questionnaires, 43 simplified issue, 36 riders, signatures, 44 underwriting authorization (HIPAA), universal life insurance.(definition), 20 whole life insurance (definition), 20 53

61 Waiver of Premium Rider, 2, 4, 7, 12, 20, 24, 25, 27, 28, 29, 30, 31, 47 (as it affects the Children s Term Rider), 27 (as it affects the Spouse Term Rider), 25 eligibility guidelines, 31 exclusions, 29 54

62 Notes 55

63 Notes 56

64 COLONIAL LIFE COLLEGE BUILDING CONFIDENCE Colonial Voluntary Benefits products are underwritten by: The Paul Revere Life Insurance Company, Worcester, MA Administrative office: Colonial Voluntary Benefits 1200 Colonial Life Boulevard, Columbia, SC colonial-paulrevere.com 9/