VTL Plan Documents & Forms
Plan number 1119934
Schedule of Life Insurance
The optional, voluntary term life insurance plan allows you to acquire additional life insurance from one-half to three and one-half times your salary. The amount of coverage is based upon your annual benefits salary. If your salary is not an even thousand, it will be rounded to the next highest thousand and multiplied by the chosen coverage. Coverage is available in the following amounts:
| 1/2 x salary | 1 x salary | 1 1/2 x salary | 2 x salary | 2 1/2 x salary | 3 x salary | 3 1/2 x salary |
Maximum Coverage Limits
The maximum amount of available life insurance is $1,000,000.
Rates
The voluntary term life insurance plan is age-rated—rates change as a person reaches ages 40, 50, and 60. When determining the right amount of coverage for you, take note of group life rates and voluntary term life rates. The rates for group life insurance are generally higher since it must insure all employees no matter what age they are or what medical conditions they might have. Carefully evaluate these two plans to ensure you are getting the most coverage for your money.
| Age | Monthly Rate per $1,000 |
|---|---|
| Less than age 40 | $.04 |
| 40 but less than 50 | $.10 |
| 50 but less than 60 | $.26 |
| 60 and up | $.56 |
Voluntary term life insurance premiums are paid on a pre-tax basis.
Adjustments to the amount of insurance and/or the rate paid for the insurance due to a change in age or budgeted salary will generally adjust annually on Jan. 1.
Taxable Life Insurance
The Internal Revenue Service (IRS) has determined that if an employer allows employees access to life insurance above $50,000, the amount over $50,000 has a value to the employee and is taxable.
taxable life insurance rate table
Taxable Life Insurance Rate Table
This value must be added to the individual’s taxable salary when reporting income earned on the annual W-2. This income is based on the following IRS table:
| Age | Rate per $1,000 of Excess Life Insurance Per Year |
|---|---|
| Under 25 | $.60 |
| 25-29 | $.72 |
| 30-34 | $.96 |
| 35-39 | $1.08 |
| 40-44 | $1.20 |
| 45-49 | $1.80 |
| 50-54 | $2.76 |
| 55-59 | $5.16 |
| 60-64 | $7.92 |
| 65-69 | $15.24 |
| 70 and older | $24. |
Example: For a 46-year-old employee with a salary of $50,000, electing the three times the annual salary life insurance coverage option, an additional $180 is added to the W-2 as taxable income.
Calculation:
$150,000 minus $50,000 = $100,000
$100,000 divided by $1,000 = $100
$100 times 1.80 = $180.00
In determining the amount of life insurance above $50,000, the employer must total all life insurance programs in which the employee participates. For the University of Iowa, this would include the basic group program and the supplemental life insurance program.
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The information presented on our website describes only the highlights of the plans and does not constitute official plan documents. Additional terms and conditions may apply. If there are any discrepancies between the information contained herein and the official plan documents, the plan documents will govern.