Dec 27, 2002

Life Insurance Questions and Answers

Q: Why does the life insurance end at age 65? Shouldn’t life insurance cover me for my lifetime?

A: There are basically two types of life insurance - permanent policies or temporary policies called term policies. Your coverage under the Carpentry Workers’ Benefit Plan, as with any group plan, is term insurance.

Term policies provide insurance coverage for a specified period (while you are on benefits, up to age 65 in our plan) and then expire. The death benefit is paid only if you die during the term of the policy. When your coverage expires, you no longer have insurance.
Our policy does provide for early payment of 50% of the benefit if you apply before age 63 and are terminally ill with life expectancy predicted to be 12 months or less.
Permanent or whole life insurance is designed to provide insurance protection for your entire lifetime, as long as you keep the policy in force. This type of insurance is much more expensive than term insurance, however unlike term insurance, as you pay premiums reserves accumulate as a cash value or cash surrender value. The cash value is available to you if you want to borrow against your policy or cancel (surrender) it. This type of insurance is purchased by individuals from an insurance agent.

Q: Why would the early payment of 50% of the benefit on terminal illness only be in effect if I apply before age 63? I thought I was covered to age 65.

A: Our policy covers death up to age 65 and our premiums are based on that. If you become terminally ill after age 63, there is a chance you won’t die until after you turn 65, even if you are very seriously ill. And there is no benefit paid on a death after 65. If you did die between age 63 and 65, your beneficiary would be paid the full value of your life insurance.

Please contact the Plan office if you have any questions or comments.

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