Academic Affairs Manual (ACD)

Effective: 7/1/1978

Revised: 3/1/2005

ACD 601–03: Basic and Supplemental Life Insurance

Purpose

To provide eligible faculty and academic professionals with group life insurance programs

Sources

Internal Revenue Code § 125

Arizona Administrative Rules and Regulations, R2-5-602 (Supp. 1983–84); -604 (Supp. 1983–84)

Arizona Board of Regents Policy Manual - 6–604

Applicability

Faculty and academic professionals who:

1. are employed to work 20 hours per week (50 percent FTE) or more for a continuous period of six or more months

   and

2. are qualified to participate in and are making contributions to an approved state or optional retirement program unless exempted by law.

Policy

The state of Arizona provides for each eligible faculty member or academic professional a $15,000 group term life insurance policy at no cost.

A faculty member or academic professional is offered a choice of group supplemental life and accidental death and dismemberment insurance and individual supplemental life insurance from one company at group rates in varying coverage amounts depending on salary. A premium is established according to the amount of coverage selected and the individual’s age. Dependent coverage is available on all supplemental life coverage.

Payroll deductions for group supplemental life premiums are made before Social Security and federal and state income tax are withheld, thereby reducing the taxable salary basis. These benefits, or any portion thereof, are not offered on an after-tax basis.

Premiums for group supplemental life insurance coverage in excess of $35,000 must be valued as taxable income each year using the applicable IRS table. This imputed value is subject to federal and state income taxes and FICA. The imputed value is calculated and applied at the end of the tax year for the purpose of income tax reporting. The imputed value is normally less than the actual premium, and thereby maintains a tax savings.

ProceduresD

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Initiation of the State-Provided Life Insurance

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Responsibility	Action
Faculty member or academic professional	Complete the application at orientation.
Human Resources	Submit the life insurance application to the State of Arizona for processing.
Faculty member or academic professional	Complete the proper forms in Human Resources, if beneficiary change(s) are desired.

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Purchase of Supplemental Life Insurance

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Responsibility	Action
Faculty member or academic professional	Select the company or companies and coverage amount(s) desired and complete the appropriate application at orientation or during a designated open enrollment period. Note: Coverage changes to group life insurance plans will remain in force unless changed during the designated open enrollment period. Because group supplemental life coverage is offered on a pretax basis, coverage can be changed only during the designated open enrollment period or for a bonafide family status change, i.e., marriage, divorce, death, birth, or adoption of a dependent; or change in dependent status of a child.
Human Resources (HR)	Submit the life insurance application to the proper company for processing.
	If beneficiary changes are required:
Faculty member or academic professional	Complete the proper forms in Human Resources. Note: Beneficiary changes can be made at any time.
HR	Submit beneficiary changes to the proper company for processing.

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