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Item 4HITEM 4H CITY OF SOUTHLAKI MEMORANDUM July 30, 2014 TO: Shana Yelverton, City Manager FROM: Stacey Black, Director of Human Resources SUBJECT: Approve a contract with Cigna to provide employee Long Term Disability, Accidental Death and Dismemberment and Basic Life Insurance for Plan Year October 1, 2014 to September 30, 2015. Action Requested: Approve a contract with Cigna to provide employee Long Term Disability, Accidental Death and Dismemberment and Basic Life Insurance for Plan Year October 1, 2014 to September 30, 2015. Background Information: As part of its standard benefit package, the City provides all full-time employees with Long Term Disability (LTD), Accidental Death and Dismemberment (AD&D) and Basic Life Insurance. Cigna is the City's current LTD carrier. The LTD plan provides employees with 60% of their salary after a 90 day waiting period if the employee is unable to return to work due to a disability. The Standard is the City's provider for AD&D and Basic Life Insurance. The City's Basic Life insurance provides employees with one times their annual salary (up to $50,000) in life insurance and the AD&D coverage provides employees with one times their annual salary (up to $50,000) in coverage for on the job accidental death or dismemberment. The Standard also offers employees the opportunity to purchase additional voluntary supplemental life insurance at their own cost. Both carriers have been the City's provider for insurance since 2006. In May, the City issued a Request for Proposals for Long Term Disability, Accidental Death and Dismemberment, and Basic Life Insurance. The City last issued an RFP for LTD, AD&D and Basic Life insurance in 2006, and will typically issue an RFP every six years, depending upon renewal proposals. Five carriers submitted proposals in response to the RFP, including the current carriers. Each proposal was reviewed and evaluated based on the following criteria: 0 experience, qualifications, reputation and references; Shana Yelverton, City Manager July 30, 2014 Page 2 • rates; • schedule of benefits; and • reporting and ease of billing. ITEM 4H Staff carefully reviewed each proposal to determine the best option for the City. Following an initial review and interviews, Cigna and The Standard were selected as finalists. Both carriers offered LTD, AD&D, Basic Life, and Supplemental Voluntary Life insurances at the City's current benefit levels. A summary of the proposed rates and the associated annual estimated premium costs are below. Current Cigna The Standard Coverage Rate Est. Annual Rate Est. Annual Rate Est. An LTD Cost Cost Cost Rate / $100 $ 0.223 $ 36,803 $ 0.190 $ 31,356 $ 0.320 $ 52,811 AD&D Rate / $1, 000 $ 0.040 $ 6,517 $ 0.030 $ 4,888 $ 0.040 $ 6,517 Basic Life Rate / $1, 000 $ 0.085 $ 13,849 $ 0.110 $ 17,922 $ 0.075 $ 12,219 Tota I: $ 57,169 F $ 54,166 $ 71,547 After meeting with both companies and analyzing plan options, staff recommends selecting Cigna as the provider for LTD, AD&D, and Basic Life insurance. Although Cigna's Basic Life rate is higher than the current rate, Cigna's proposal includes a reduced LTD rate if the City selects Cigna for all three products. Otherwise, Cigna proposes the current LTD rate for a standalone product. Packaging the products results in an overall cost savings of slightly more than $3,000. In addition, Cigna has offered a three year rate guarantee. There are a number of advantages to selecting Cigna to provide LTD, AD&D, and Basic Life Insurance in addition to the lower premiums and three year rate guarantee, including: • The City has had a favorable experience with the current LTD plan and by awarding the contract to one carrier it consolidates billing and administrative processes; • The voluntary supplemental life insurance premiums are lower than the current premium structure; and • Cigna offers additional services for employees as part of the basic life insurance coverage including will preparation, emergency travel assistance and identity theft assistance. Shana Yelverton, City Manager ITEM 4H July 30, 2014 Page 3 Financial Considerations: The estimated cost of LTD, AD&D and Basic Life Insurance is $4,514 per month, or $54,166 annually. The annual estimated decrease in premiums is $3,003 for FY 2015. The proposed LTD, AD&D and Basic Life Insurance plan costs will be included in the proposed budget for Fiscal Year 2015. Strategic Link: Performance Management and Service Delivery: attract, develop and retain a skilled workforce. C13O2: Become an employer of choice by developing a plan to recruit, develop and retain employees committed to excellence. Citizen Input/ Board Review: N/A Legal Review: N/A Alternatives: Deny contract Cigna and seek alternative options. Supporting Documents: The following supporting documents are attached: • RFP Finalist Comparison • Cigna Proposal Staff Recommendation: Approve a contract with Cigna to provide employee Long Term Disability, Accidental Death and Dismemberment and Basic Life Insurance for Plan Year October 1, 2014 to September 30, 2015. Basic Life AD&D LTD Basic Life AD&D LTD *Only if bundled with Basic and AD&D, otherwise reverts to current rate. Basic Life AD&D LTD Proposed Rates - STANDARD Basic Life, AD&D and LTD Finalists Current Rates Carrier Estimated Volume Rate / $1,000 Monthly Cost Annual Cost Standard $ 13,577,000 $ 0.085 $ 1,154 $ 13,849 Standard $ 13,577,000 $ 0.040 $ 543 $ 6,517 Carrier Estimated Volume Rate / $100 Monthly Cost Annual Cost Ci na 1 $ 1,375,281 1 $ 0.223 1 $ 3,067 $ 36,803 Total: $ 57,168.02 Proposed Rates - CIGNA Carrier Estimated Volume Rate / $1,000 Monthly Cost Annual Cost Cigna $ 13,577,000 $ 0.110 $ 1,493 $ 17,922 Cigna $ 13,577,000 $ 0.030 $ 407 $ 4,888 Carrier Estimated Volume Rate / $100* Monthly Cost Annual Cost Ci na $ 1,375,281 $ 0.190 $ 2,613 1 $ 31,356 Total: $ Difference: $ 54,165.77 (3,002.25) Carrier Estimated Volume Rate / $1,000 Monthly Cost Annual Cost Cigna $ 13,577,000 $ 0.075 $ 1,018 $ 12,219 Cigna $ 13,577,000 $ 0.040 $ 543 $ 6,517 Carrier Estimated Volume Rate / $100 Monthly Cost Annual Cost Ci na 1 $ 1,375,281 $ 0.320 1 $ 4,401 1 $ 52,811 Total: $ 71,547.05 Difference: $ 14,379.03 Prepared For: City of Southlake Requested By: LIFETIME BENEFIT INSURANCE LLP Proposed Effective Date: October 1, 2014 This Proposal Valid Until: September 2, 2014 Underwritten By: Life Insurance Company of North America The information contained in the following response/proposal is confidential and proprietary information of the insurance company making the proposal. It is being provided with the understanding that it will not be used by City of Southlake, its representatives or consultants for any purpose other than the evaluation of the insurance company's proposal in connection with the services sought by City of Southlake. Dissemination of the information contained herein by City of Southlake, its representatives and consultants shall be limited to their respective employees who are directly involved in the evaluation process. Under no circumstances is any of the information contained herein (including excerpts, summaries, extracts and evaluations thereof) to be used, disseminated, disclosed or otherwise communicated to any person or entity other than City of Southlake and its representatives and consultants involved in the evaluation process. .-,-y(.:,ugna, "Cigna," "Cigna Group Insurance" and the "Tree of Life" logo are registered service marks of Cigna Intellectual Property, Inc., licensed for the use by operating subsidiaries of Cigna Corporation. All products and services are provided exclusively by such operating subsidiaries and not by Cigna Corporation. As used in this proposal, these service marks refer to the insurance company which has issued this proposal. City of Southlake Long Term Disability Proposal Schedule of Benefits Summary Eligibility All active, full-time U.S. Employees of the Employer regularly working a minimum of 30 hours per week. Monthly Benefit 60% to $5,000 Benefit Waiting Period 90 days Definition of Disability 24 Months Own Occupation Definition of Covered Earnings Employee's annual wages or salary, including commission, and excluding extra compensation, bonus, and overtime. Commission will be averaged over a 12 month eriod. Eligibility Waiting Period No waiting period Earnings Test 80/60 OR Taxation of Benefits Taxable Benefit Benefits below apply to the following classes: 1 Accumulated Sick Leave Not Included in Benefit Waiting Period Minimum Benefit $100 or 10% of benefit Maximum Benefit Duration To Age 65 Benefit Reduction Schedule Traditional graded scale to 65 Integration Type Full Family Employer Contribution 100% Survivors Benefits 3 months lump sum Continuation of Insurance Family Medical Leave (12 weeks) Family Medical Military Leave (12 weeks) -Dre-Existing Condition Limitation 3 months Prior/12 months Insured ental Illness Limitation 24 Month Lifetime Limitation Substance Abuse Limitation 24 Month Lifetime Limitation Chemical Sensitivity No Limitation Subjective Symptom Limitation No Limitation Return to Work Incentive Included Trial Work Days Unlimited Rehabilitation Benefits Included Life Assistance Program Included Number of Eligible Employees 283 For additional descrintions_ see Kev Definitions and Provkinns cectinn helnw Coverage Monthly Covered Payroll Monthly Rate per $100 of Monthly Covered Payroll Monthly Premium LTD 1,108,001 $0.19 $2,105 Rates are guaranteed for 3 years Rates are only valid if the product is sold as part of this package LONG TERM DISABILITY COIYM I[SSION SUMMARY Rates include a Flat 15% Commission City of Southlake Basic Term Life Proposal Schedule of Benefits Summary Employee Eligibility All active, full-time U.S. Employees of the Employer regularly working a minimum of 30 hours per week. Employee Eligibility Waiting Period No waiting period Employee Annual Compensation Employee's annual wages or salary, including commission, and excluding Definition extra compensation, bonus, and overtime. Commission will be averaged over a 12 month period. Employee Basic Life Benefit 1 times annual compensation rounded to the nearest $1,000 not to exceed $50,000 Employee Guaranteed Issue Amount 1 times annual compensation rounded to the nearest $1,000 not to exceed $50,000 Employee Minimum Benefit No minimum benefit Employee Benefit Reduction 65% @ age 70, 45% @ age 75, 30% @ age 80, 20% @ age 8515% @ age Schedule Benefits Reduce to: 90 Waiver of Premium with Must be totally disabled before age 60 Extended Death Benefit 6 month waiting period Benefit provided to age 65 Extended Death Benefit coverage during waiting period, no premiums required during this time Continuation for Disability Life coverage continued for a disabled employee over the age of 60 on a (Age 60+) continuing premium paying basis for up to 12 months, while policy is in force Continuation of Insurance Family Medical Leave (12 weeks) Family Military Convalescence Support (26 weeks) Leave of Absence (2 months) Portability Employee only Coverage ends at age 70 Inforce amounts do not require medical underwriting. Increases in coverage are allowed up to plan max with medical underwriting Terminal Illness The lesser of 75% up to $50,000 for Basic benefits Coverage available for employees and spouses Employer Contribution 100°l0 Number of Eligible Employees 283 Beneficiary Services - Comprehensive package of financial, bereavement and legal counseling - Available for benefit payments >= $5,000 BASIC TERM LIFE RATE SUMMARY Coverage Estimated Volume Rate Estimated Monthly Cast Basic Employee Life Em lgive $11,529,600 $0.11 per $1,000 $1,268 We have separate rates for ported individuals. Rates are guaranteed for 3 years Rates are only valid if the product is sold as part of this package BASIC TERM LIFE COMMISSION SUMMARY Rates include a Flat 15% Commission City of Southlake Basic Accident Proposal Schedule of Benefits Summary Eligibility All active, full-time U.S. Employees of the Employer regularly working a minimum of 30 hours per week. Benefits: Covered Earnings Definition Employee's annual wages or salary, including commission, and excluding extra compensation, bonus, and overtime. Commission will be averaged over a 12 month period. Eligibility Waiting Period None Employee Benefit 1 times Base Annual Earnings rounded to the next higher $1,000 subject to a maximum of $50,000 Coverage Basic, Employer paid, 24 Hour Accidental Death & Dismemberment Benefits. Other enhancements will be defined in the policy. Loss of Life 100% of the Principal Sum Dismemberment Loss of Two or More Hands or Feet 100% of the Principal Sum Loss of Sight of Both Eyes 100°% of the Principal Sum Loss of Speech and Hearing (in both ears) 100% of the Principal Sum Quadriplegia (Total paralysis of upper and 100°% of the Principal Sum lower limbs) Paraplegia (Total paralysis of both lower 75% of the Principal Sum limbs) Hemiplegia (Total paralysis of upper and 50% of the Principal Sum lower limbs on one side of the body) Uniplegia (Total paralysis of one upper or 25% of the Principal Sum one lower limb) Loss of One Hand or Foot 50% of the Principal Sum Loss of Sight in One Eye 50°% of the Principal Sum Severance and Reattachment of One Hand 50% of the Principal Sum or Foot Loss of Speech 50°% of the Principal Sum Loss of Hearing (in both ears) 50% of the Principal Sum Loss of Thumb and Index Finger of the 25% of the Principal Sum Same Hand Loss of all Four Fingers of the Same Hand 25% of the Principal Sum Loss of all the Toes of the Same Foot 20% of the Principal Sum Coma Monthly Benefit 1 % of Principal Sum Number of Monthly Benefits 11 When Payable At the end of each month during which the Covered Person remains comatose Lump Sum Benefit 100% of Principal Sum When Payable Beginning of 12th Month Accidental Death & Dismemberment Schedule of Benefits: We will pay the benefit for any one of the Covered Losses listed in the Schedule of Benefits, if the Covered Person suffers a Covered Loss resulting directly and independently of all other causes from a Covered Accident within the applicable time period specified in the Schedule of Benefits. If the Covered Person sustains more than one Covered Loss as a result of the same Covered Accident, benefits will be paid for the Covered Loss for which the largest available benefit is payable. If the loss results in death, benefits will only be paid under the Loss of Life benefit provision. Any Loss of Life benefit will be reduced by any paid or payable Accidental Dismemberment benefit. However, if such Accidental Dismemberment benefit equals or exceeds the Loss of Life benefit, no additional benefit will be paid. Extension of Coverage: Coverage expanded to cover the following circumstances: • Exposure & Disappearance - loss occurs due to exposure; disappearance if not found within one year Benefit Reductions We can help you meet your Age Discrimination in Employment Act (ADEA) responsibilities by extending coverage to all active employees, regardless of age. Benefits reduced for employees based on ages at time of accident according to the following schedule: 65% @age 65-69, 45% gage 70-74, 30% @age 75-79; 20% @age 80 or over Continuation of Insurance Family Medical Military Leave (12 weeks) Leave of Absence (2 months) Additional Benefits: Child Day Care Reimburse child care expenses if the Employee or covered spouse dies & is survived by a Covered Dependent Child Additional 3% of principal sum; maximum $3,000 per year; for 4 years oruntilage 13, whichever occurs first Law Enforcement Officer's Benefit We will pay the benefit shown in the Schedule of Benefits, subject to the following conditions and exclusions, on receipt of due proof that the Covered Person, while serving as a Law Enforcement Officer, suffers a Covered Loss that results directly and independently of all other causes from a Covered Accident. The Covered Accident must occur in the line of duty. Benefits will not be paid for a loss caused by or resulting from any of the following: 1. injury resulting from maintenance, repair or cleaning of firearms; 2. injury sustained in consequence of the illegal use of fire arms by the Covered Person Additional 100% of applicable principal sum to $50,000 Seatbelt and Airbag Benefit Covered Person dies directly and independently of all other causes from a Covered Accident while wearing a seatbelt and riding in a private passenger automobile. If seatbelt benefit is payable, an additional benefit is provided if Covered Person was also positioned in a seat protected by a properly —functioning and properly deployed Supplemental Restraint System Airbag. Seatbelt: Additional 10% of the principal sum to a maximum of $25,000 Airbag: Additional 5% of the principal sum to a maximum of $10,000 Special Education Benefit I (Child) We will pay the Benefit below for each qualifying Dependent Child of a Covered Person whose death resulted from a Covered Accident, if the child enrolls as a full-time student at an accredited school of higher learning within 365 days from the date of the Covered Accident, continues his education as a full-time student and incurs expenses for tuition, fees, books, room and board, transportation and any other costs payable directly to, or approved and certified by, such school. Additional 3% of Principal Sum, up to a maximum of $3,000 per year for up to 4 years If no dependent child qualifies we will pay the following default amount: $1,000 Spouse Training Reimburse covered Spouse who receives education/training for employment within three years of the covered employee's death as a result of a loss Additional 3% of principal sum to $3,000 I Beneficiary Designation I Recognize Prior Beneficiary Designations or Pay According to Succession Schedule (if no beneficiary has been designated) BASIC ACCIDENT RATE SUMMARY Number of Eligible Lives: 283 Coverage Estimated Volume Rate/S1,000 Estimated Monthly Cost Class 1 Employee Only $11,529,600 $0.03 $346 Premium rates are guaranteed for 36 months provided that the first year premium exceeds $1,200. Rate guarantee is subject to all provisions of the policy including the policy's termination provisions. Rates are only valid if the product is sold as part of this package BASIC ACCIDENT COMMISSION SUMMARY Rate includes a Flat 15% Commission City of Southlake Voluntary Term Life Proposal Schedule of Benefits Summary Employee Eligibility All active, full-time U.S. Employees of the Employer regularly working a minimum of 30 hours per week. Employee Eligibility Waiting Period No waiting period Employee Annual Compensation Employee's annual wages or salary, including commission, and excluding Definition extra compensation, bonus, and overtime. Commission will be averaged over a 12 month period. Employee Voluntary Life Benefit Units of $10,000 to $500,000, not to exceed 5 times Annual Earnings Employee Guaranteed Issue Amount $130,000 Employee Minimum Benefit No minimum benefit Spouse Eligibility Employees must participate in voluntary plan for dependents to participate Domestic Partner Z Civil Union State -registered civil unions/domestic partnerships included (state Coverage mandate). Employer -recognized Domestic Partners may optionally be included (definition to be agreed upon). Spouse Life Benefit Units of $5,000 to the lesser of $250,000 or 50°% of Employee's Voluntar, Life Insurance Amount Infant/Child Life Benefit Birth to 6 months: $1,000 6 months to 26 years: Units of $1,000 to $10,000 Dependent Guaranteed Issue Amount Spouse: $25,000 Child: All Guaranteed Issue Initial Enrollment Event Offered for an effective date of 101112014 Applies to all eligible employees (including dependents) Enrollment Guaranteed Issue: • Employee: Up to case level Guaranteed Issue* • Spouse: Up to case level Guaranteed Issue* *Any benefit amounts above the case level Guaranteed Issue are subject to full medical underwritin Ongoing Enrollment Event None Employee Benefit Reduction 65°% @ age 70, 45°% @ age 75, 30% @ age 80, 20% @ age 85, 15% @ Schedule Benefits Reduce to: age 90 Waiver of Premium with Must be totally disabled before age 60 Extended Death Benefit 6 month waiting period Benefit provided to age 65 Extended Death Benefit coverage during waiting period, no premiums required during this time Continuation for Disability Life coverage continued for a disabled employee over the age of 60 on a (Age 60+) continuing premium paying basis for up to 12 months, while policy is in force Continuation of Insurance Family Medical Leave (12 weeks) Family Military Convalescence Support (26 weeks) Leave of Absence (2 months) Portability Employee and covered dependents Coverage ends at age 70 Inforce amounts do not require medical underwriting. Increases in coverage are allowed up to plan max with medical underwriting Terminal Illness The lesser of 75% up to $500 000 for Voluntary benefits Coverage available for employees and spouses Participation Requirement 30% of eligible employees Suicide Exclusion We do not pay death benefits if insured commits suicide during first two years of coverage This two year suicide exclusion also applies to all later increases in coverage Employee Contribution 100% Number of Eligible Employees 283 Beneficiary Services - Comprehensive package of financial, bereavement and legal counseling - Available for benefit payments >= $5,000 Enrollment Communications & Support - Client -specific brochures & applications Coverage Premium Rate Voluntary Term Life Errs plojgee See Step Rates Table below Voluntary Dependent Life - Err. S ouse See Step Rates Table below—, ClnZc $0.2500 per $1,000 1 VOLUNTARY LIFE INSURANCE STEP RATES FOR EMPLOVFV AND.WnITRF Age Employee and Spouse Rate per $1,000 <20 $0.059 20-24 $0.093 25-29 $0.093 30-34 $0.093 35-39 $0.11" 40-44 $0.164 45-49 $0.247 50-54 $0.392 55-59 $0.630 60-64 $0.966 65-69 $1.638 70-74 $3.108 75-79 $6.278 80-84 $12.472 85-89 $22.993 90-94 $37.516 95-99 $56.947 We have separate rates for ported individuals. Rates are guaranteed for 3 years Rates are only valid if the product is sold as part of this package VOLUNTARY TERM LIFE COMMISSION SUMMARY Rates include a Flat 15% Commission City of Southlake Voluntary Accident Proposal Schedule of Benefits Summary Eligibility All active, full-time U.S. Employees of the Employer regularly working a minimum of 30 hours per week. Benefits: Covered Earnings Definition Employee's annual wages or salary, including commission, and excluding extra compensation, bonus, and overtime. Commission will be averaged over a 12 month period. Eligibility Waiting Period None Employee Benefit Units of $10,000 to $500,000, not to exceed 5 times Annual Earnings Coverage Voluntary, Employee paid, 24 Hour Accidental Death & Dismemberment Benefits. Other enhancements will be defined in the policy. Domestic Partner f Civil Union Coverage State -registered civil unions/domestic partnerships included (state mandate). Employer -recognized Domestic Partners may optionally be included (definition to be agreed upon). Loss of Life 100% of the Principal Sum Dismemberment Loss of Two or More Hands or Feet 100% of the Principal Sum Loss of Sight of Both Eyes 100°% of the Principal Sum Loss of Speech and Hearing (in both ears) 100°% of the Principal Sum Quadriplegia (Total paralysis of upper and 100% of the Principal Sum lower limbs) Paraplegia (Total paralysis of both lower 75% of the Principal Sum limbs) Hemiplegia (Total paralysis of upper and 50% of the Principal Sum lower limbs on one side of the body) Uniplegia (Total paralysis of one upper or 25% of the Principal Sum one lower limb) Loss of One Hand or Foot 50% of the Principal Sum Loss of Sight in One Eye 50% of the Principal Sum Severance and Reattachment of One Hand 50% of the Principal Sum or Foot Loss of Speech 50% of the Principal Sum Loss of Hearing (in both ears) 50% of the Principal Sum Loss of Thumb and Index Finger of the 25% of the Principal Sum Same Hand Loss of all Four Fingers of the Same Hand 25% of the Principal Sum Loss of all the Toes of the Same Foot 20% of the Principal Sum Coma Monthly Benefit 1 % of Principal Sum Number of Monthly Benefits 11 When Payable At the end of each month during which the Covered Person remains comatose Lump Sum Benefit 100% of Principal Sum When Payable Beginning of 12th Month Accidental Death & Dismemberment Schedule of Benefits: We will pay the benefit for any one of the Covered Losses listed in the Schedule of Benefits, if the Covered Person suffers a Covered Loss resulting directly and independently of all other causes from a Covered Accident within the applicable time period specified in the Schedule of Benefits. If the Covered Person sustains more than one Covered Loss as a result of the same Covered Accident, benefits will be paid for the Covered Loss for which the largest available benefit is payable. If the loss results in death, benefits will only be paid under the Loss of Life benefit provision. Any Loss of Life benefit will be reduced by any paid or payable Accidental Dismemberment benefit. However, if such Accidental Dismemberment benefit equals or exceeds the Loss of Life benefit, no additional benefit will be paid. Extension of Coverage: Coverage expanded to cover the following circumstances: • Exposure & Disappearance - loss occurs due to exposure; disappearance if not found within one year Spouse Benefit Units of $5,000 to $250,000 Spouse Maximum Principal Sum $250,000 Child Benefit Units of $1,000 to $10,000 Child Maximum Principal Sum $10,000 Benefit Reductions We can help you meet your Age Discrimination in Employment Act (AREA) responsibilities by extending coverage to all active employees, regardless of age. Benefits reduced for employees based on ages at time of accident according to the following schedule: 65% @age 65-69, 45°% @age 70-74, 30% @age 75-79; 20% @age 80 or over Continuation of Insurance Family Medical Military Leave (12 weeks) Additional Benefits: Child Day Care Reimburse child care expenses if the Employee or covered spouse dies & is survived by a Covered Dependent Child Additional 3% of principal sum; maximum $3,000 per year; for 4 ears or until age 13, whichever occurs first Law Enforcement Officer's Benefit We will pay the benefit shown in the Schedule of Benefits, subject to the following conditions and exclusions, on receipt of due proof that the Covered Person, while serving as a Law Enforcement Officer, suffers a Covered Loss that results directly and independently of all other causes from a Covered Accident. The Covered Accident must occur in the line of duty. Benefits will not be paid for a loss caused by or resulting from any of the following: 1. injury resulting from maintenance, repair or cleaning of firearms; 2. injury sustained in consequence of the illegal use of fire arms by the Covered Person Additional 100% of applicable principal sum to $50,000 Seatbelt and Airbag Benefit Covered Person dies directly and independently of all other causes from a Covered Accident while wearing a seatbeh and riding in a private passenger automobile. If seatbeh benefit is payable, an additional benefit is provided if Covered Person was also positioned in a seat protected by a properly —functioning and properly deployed Supplemental Restraint System Airbag. Seatbelt: Additional 10% of the principal sum to a maximum of $25,000 Airbag: Additional 5% of the principal sum to a maximum of $10,000 Special Education Benefit I (Child) We will pay the Benefit below for each qualifying Dependent Child of a Covered Person whose death resulted from a Covered Accident, if the child enrolls as a full-time student at an accredited school of higher learning within 365 days from the date of the Covered Accident, continues his education as a full-time student and incurs expenses for tuition, fees, books, room and board, transportation and any other costs payable directly to, or approved and certified by, such school. Additional 3% of Principal Sum, up to a maximum of $3,000 per year for up to 4 years If no dependent child qualifies we will pay the following default amount: $1,000 Spouse Training Reimburse covered Spouse who receives education/training for employment within three years of the covered employee's death as a result of a loss Additional 3% of principal sum to $3,000 Beneficiary Designation Recognize Prior Beneficiary Designations or Pay According to Succession Schedule (if no beneficiary has been designated) Number of Eligible Lives: 283 Coverage Ratel$1,000 Class 1 Employee Only $0.0340 Spouse Only $0.0260 Children Only $0.0280 Rates are subject to change. Premium rates are guaranteed for 36 months provided that the first year premium exceeds $1,200. Rate guarantee is subject to all provisions of the policy including the policy's termination provisions. Rates are only valid if the product is sold as part of this package VOLUNTARY ACCIDENT COMMISSION SUMMARY Rate includes a Flat 15% Commission Cigna Programs and Services Provided at No Additional Cost Identity Theft - provides specialized Personal Case Managers who assist consumers who have experienced an identity theft event. • Will Preparation and Funeral Planning Services - provides online access state -specific legal documentation for Wills and Power of Attorney and include valuable resources for estate and funeral planning. • Healthy Rewards® - provides discounts on a variety of health and wellness products and services. • Cigna's Life Assistance & Work/Life Support Program - provides 3 face to face visits to counselors to address emotional issues, as well as online resources and interactive tools. • Cignasurrance® - provides assistance from expert resources in financial, legal, and behavioral health services for beneficiaries with claim payments of $5,000 or more. • Cigna Secure Travel - provides comprehensive protection when traveling 100 miles or more from home, including unlimited medical evacuation and repatriation benefits • AD&D Conversion - available up to age 70; to a maximum of $250,000. • My Secure Advantage TM -offers customers with approved long-term disability claims (and their household members) access to expert "money coaching" for all types of financial planning and challenges. Superior Service and Simplified Administration • Dedicated Account Managers to oversee plan design effectiveness; provide ongoing consultative analysis and make recommendations to optimize productivity/minimize costs. • Dedicated Implementation Coordinators to help ensure easy plan setup, answer questions, resolve issues and drive employee awareness and education through marketing and communications. • Dedicated Clinical and Expert Resources which includes over 800 disability claim managers in four offices, 80 medical professionals, 9 medical directors, 35 vocational professionals, 65+ intake specialists and access to over 1,100 nurses and 500 doctors representing over 40 clinical specialties. • Comprehensive Reporting and Online Tools to help make informed decisions and manage costs. • Verbal Authorization and Telephonic Intake - Employees calling to report a disability claim can provide authorization to access medical information using a secure, confidential interactive voice response system, which allows for faster disability claim processing. • Stay -at -Work Services - help employees with physical/psychological limitations that are at increased risk of a disability get the support they need to stay productive and on the job. • Social Security Advocacy - program offers expert resources to help qualified employees apply and be approved for Social Security Disability Insurance. • Cigna's "Work Wellness" Website http://www.cigna.com/workwellness is an online resource for customers which includes useful information on disability and return to work, general information on family medical leave, managing their particular health condition at work and more. Disability Contract Features • Return to Work Incentive Benefit For the first 24 months of the benefits payable - allows an individual through a combination of work earnings and disability benefit, the potential to obtain 100% of pre -disability income. • Use of Trial Work Days Cigna offers an unlimited Number of days an employee can attempt to return to work without extending the elimination period. • Rehabilitation Program Rehabilitation expenses (which can include expenses for medical, education, moving, family care or other) are paid for at Cigna's discretion. No rehabilitation expense cap exists in our contract. • FICA Services Cigna offers three level of service for Employer Paid business - Self -report and pay, FICA reimbursement and FICA match - to accommodate the specific needs of our disability clients. Maximum Benefit Period 'his is the maximum length of time for which we will pay Disability Benefits to a disabled employee. Benefit payments may end earlier if the employee no longer qualifies under the terms or conditions of this policy. Age at Start of Disability Maximum Benefit Duration age 62 or younger the employee's 65th birthday or the 42nd monthly_disabili age 63 age 64 age 65 ige 66 age 67 age 68 age 69 or older the 36th monthly disability benefit the 30th monthly disability benefit the 24th monthly disability benefit the 21 st monthly disability benefit the 18th monthly disability benefit the 15th monthly disability benefit the 12th monthly disability benefit Life Contract Features Extended Death Benefit with Waiver of Premium: • We provide up to 12 months of premium -free continued life insurance coverage for disabled employees - even if they're attempting to return to work • We also provide up to 18 months of additional premium -free coverage if the employee is participating in a rehabilitation program. And if the employee is too sick to fully work again, Cigna's life insurance coverage will continue subject to the waiver of premium and continuation provisions quoted "Linked waiver" Automatically starts the claim process to see if the customer qualifies for Term Life premiums to be waived while they're out on disability (requires Cigna Disability coverage) Portability Employees have the option to port their Group Term Life coverage at pooled port rates listed below Age Rate <20 $0.153 20-24 $0.144 25-29 $0.153 30-34 $0.177 35-39 $0.190 40-44 $0.243 45-49 $0.384 50-54 $0.726 55-59 $1.347 60-64 $2.461 65-69 $4.065 Rates for ported insureds are based on the company's pooled experience for ported certificates and are higher than active employee rates. Rates for ported insureds are renewed annually and are not subject to any rate guarantee proposed for active employees. Ported coverage ends at age 70. AD&D Contract Features tcident Exclusions In addition to any benefit -specific exclusions, benefits will not be paid for any Covered Injury or Covered Loss which, directly or indirectly, in whole or in part, is caused by or results from any of the following unless coverage is specifically provided for by name in the Description of Benefits Section: l . intentionally self-inflicted Injury, suicide or any attempt thereat while sane or insane; 2. commission or attempt to commit a felony or an assault; 3. commission of or active participation in a riot, insurrection or Terrorist Act; 4. declared or undeclared war or act of war; 5. flight in, boarding or alighting from an Aircraft or any craft designed to fly above the Earth's surface: a. except as a fare -paying passenger on a regularly scheduled commercial airline; b. being flown by the Covered Person or in which the Covered Person is a member of the crew; c. being used for: i. crop dusting, spraying, seeding, giving flying instruction, receiving flying instruction, fire fighting, sky writing, sky diving, hang gliding, pipeline inspection, power line inspection, aerial photography, aerial exploration, racing, endurance tests, stunt, acrobatic flying or ii. any operation that requires a special permit from the FAA, even if it is granted (this does not apply if the permit is required only because of the territory flown over or landed on) d. designed for flight above or beyond the earth's atmosphere; e. an ultra -light or glider; f. being used for the purpose of parachuting or skydiving; g. being used by any military authority, except an Aircraft used by the Air Mobility Command or its foreign equivalent; 6. Travel in any Aircraft owned, leased or controlled by the Policyholder, Subscriber, or any of its subsidiaries or affiliates. An Aircraft will be deemed to be "controlled" by the Policyholder, Subscriber if the Aircraft may be used as the Policyholder, Subscriber wishes for more than 10 straight days, or more than 15 days in any year; 7. A Covered Accident that occurs while on active duty service in the military, naval or air force of any country or international organization. Upon Our receipt of proof of service, We will refund any premium paid for this time. Reserve or National Guard active duty training is not excluded unless it extends beyond 31 days; 8. operating any type of vehicle under the influence of alcohol or any drug, narcotic or other intoxicant including any prescribed drug for which the covered person has been provided a written warning against operating a vehicle while taking it. Under the influence of alcohol, for purposes of this exclusion, means intoxicated, as defined by the law of the state in which the Covered Accident occurred; 9. Voluntary ingestion of any narcotic, drug, poison, gas or fumes, unless prescribed or taken under the direction of a Physician and taken in accordance with the prescribed dosage; 10 Sickness, disease, bodily or mental infirmity, bacterial or viral infection or medical or surgical treatment thereof, except for any bacterial infection resulting from an accidental external cut or wound or accidental ingestion of contaminated food. .............._ PROPOSAL PROVISIONS' • This is not a contract... This proposal outlines some of the important features of the proposed group insurance program. The controlling provisions will be in the group insurance policy, and this proposal is not intended in any way to modify the provisions or their meanings. If you decide to purchase the plan proposed here, we will send you a policy that fully describes all of the provisions of the group disability, term life or AD&D insurance coverage to which you and Life Insurance Company of North America (Cigna) have agreed. To accept the terms of this proposal, you must notify Cigna of your acceptance by that date, and pay premium equal to the Total Basic Estimated Monthly Cost on the Schedule of Benefits Summary. This proposal may be withdrawn by Cigna at any time before acceptance. Eligibility Cigna's eligibility requirements assume that employees are working on a full-time basis, and citizens of the United States, and working in the United States. Part-time, seasonal, temporary, contracted, leased or severed employees are not eligible, unless otherwise noted. • Policy on Rate Changes The rates and fees quoted within the proposal are based on information furnished to Cigna for the purpose of developing a proposal of group insurance. Cigna has assumed that the demographic and plan design information provided will be an accurate representation of your company at the time of implementation. Premium rates are guaranteed as noted in the product schedule of benefits. These rates and the guarantee assume that the number of eligible or insured employees does not change by more than 15% from the date of the census provided. • Policy on Contractual Language Cigna's contract language will be used without modification. Cigna will attempt to match the intent of disclosed policy provisions at the time of quote, but will not duplicate the existing policy language. • Medical Underwriting Status Medical Underwriting Activity Status Reports are sent to the location(s) designated by the employer and are typically distributed on a monthly basis. If online Medical Evidence of Insurability is quoted, Medical Underwriting Activity Reports (reporting status of medically underwritten coverage) are sent electronically to the employer and are typically distributed on a weekly basis. • Producer Compensation Cigna may have entered into, or may enter into, agreements with brokers, under which the insurance company compensates brokers for providing marketplace intelligence and other services intended to enhance the effectiveness of the insurance company's business. Cigna may also invite brokers to participate in events sponsored by the insurance company for the same purposes. Any compensation paid may be based on meeting targets for new business production and persistency, and, if paid, is funded from the insurance company's overhead and is based on the broker's overall book of business with the insurance company. Any such payments are separate from commissions and, if applicable, will be included in ERISA Form 5500, Schedule A information provided by the insurance company.