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Home My WebLink AboutRESPONSE - RFP - P902 BENEFITS (2)r A PROPOSED GROUP INSURANCE PROGRAM Benefits Provided By: AnffiewLife Anthem Life Insurance Company 1801 Watermark Drive, Suite 200 Columbus, OH 43215-7088 --r City of Fort Collins Proposed Effective Date: l/l/2004 Proposal Date: 9/3/2003 Life Insurance offered by Anthem Life Insurance Company Schedule of Benefits Class Description Basic Term Life Basic AD&D Supplemental Term Life Supplemental AD&D 1, 2, or 3x Salary, up to $500,000 All Eligible Active Classified & Equal To Maximum. Combined Benefit Equal To 1 Unclassified Management & $10,000 Basic Maximum for Basic Term Life and Supplemental Contractual* Term Supplemental Term Life Cannot Term Life Employees Electing $10,000 Life Exceed $500,000. All Eligible Active Classified & 1, 2, or 3x Salary, up to $500,000 Unclassified Management & lx Salary, Equal To Maximum. Combined Benefit Equal To 2 Contractual* up to Basic Maximum for Basic Term Life and Supplemental Employees $100,000 Term Supplemental Term Life Cannot Term Life Employees Electing Ix Salary, Maximum Life Exceed $500,000. up to $100,000 Maximum *Contractual employees will be covered for the proposed benefits provided they exclusively work for the City of Fort Collins minimum 20 hours per week consecutively throughout the year !nt Life Svouse Schedule of Benefits Dependent Dependent Dependent Dependent Dependent Class Description Life Spouse Life Spouse Life Spouse Life Spouse Life Spouse Ontion 1 Option 2 Option 3 Option 4 Option 5 All Eligible Active Classified 1 & Unclassified Management & $10,000 $25,000 $50,000 $75,000 $100,000 Contractual* Employees Electing $10,000 All Eligible Active Classified & Unclassified Management & 2 Contractual* Employees $10,000 $25,000 $50,000 $75,000 $100,000 Employees Electing Ix Salary, up to $100,000 Maximum Dependent Life Child Schedule of Benefits Class Description Dependent Life Child Option 1 Dependent Life Child Option 2 All Eligible Active Classified & Unclassified 1 Management & Contractual* $5,000 $10,000 Employees Electing $10,000 All Eligible Active Classified & Unclassified 2 Management & Contractual* $5,000 $10,000 Employees Employees Electing Ix Salary, up to $100,000 Maximum Anthem Life OV Sample Certificate of Coverage Group Life and Short Term Disability Insurance Anthem Life OV AnffienrLife State of Colorado SAMPLE Group: Class: anthem.com Group Life and Short Term Disability Insurance GC-TLi M indegntlent lioraes of tha Bhx Does and B4e Shield Mometion. ®Bepmned eaAe of die 11 a CW and Blue Shield Nexietin SAMPLE Introduction This Certificate is issued according to the terms of the Group Policy but is not a part of the Group Policy. It describes the insurance provided to you, the Certificateholder, under the Group Policy, which is an agreement between Anthem Life Insurance Company (called we, our, us) and the Policyholder. In the event of a difference between this Certificate and the Group Policy, the terns of the Group Policy will prevail. The Policyholder's name appears on the Certificate cover. The policyholder pays the premium for the insurance. (The Policyholder may require you to contribute toward the premium for your coverage.) Subject to the payment of premiums, all persons who have: • satisfied the eligibility conditions • applied for coverage; and • been approved by us, are covered by the Group Policy. Such persons are called Covered Persons. All periods of time under this Certificate will begin and end at 12:00 midnight at the beginning of the day at the Group's address. None of our agents or employees can legally change this Certificate or waive any of its provisions. Any change must be approved by one of our executive officers in a rider, endorsement, or amendment. This Certificate replaces any Certificate previously issued to you under the Group Policy. ANTHEM LIFE INSURANCE COMPANY Main Administrative Office: P.O. Box 182361 Columbus, Ohio 43218-2361 John J. Gainor, President Colorado Sample Certificate 8/4/03 SAMPLE TABLE OF CONTENTS Introduction.........................................................................................I..........................I Scheduleof Benefits............................................................................................:....3 GroupTenn Life Insurance...............................................................................................3 Waiver of Premium for Group Term Life Insurance.........................................................3 Extension of Benefits for Group Term Life Insurance......................................................3 Supplemental Group Tenn Life Insurance........................................................................4 Group Accidental Death and Dismemberment Insurance.................................................4 Supplemental Accidental Death and Dismemberment Insurance .....................................5 Short Term Disability Insurance.......................................................................................5 Group Term Life Insurance for Dependents.....................................................................6 Continuation of Coverage.................................................................................................6 How and When Coverage Starts......................................................................7 Eligibility............................................................................................................................7 Application........................................................................................:...............................7 WhenCoverage Starts.......................................................................................................7 DelayedEffective Date....................................................................................4................7 Group Coverage Provisions................................................................................9 Group Tenn Life Insurance...............................................................................................9 LivingBenefit....................................................................................................................9 Waiver of Premium for Group Term Life Insurance.........................................................10 Extension of Benefits for Group Tenn Life Insurance......................................................12 Supplemental Group Term Life Insurance........................................................................13 Group Accidental Death and Dismemberment Insurance.................................................14 Supplemental Accidental Death and Dismemberment Insurance .....................................15 Short Term Disability Insurance.......................................................................................16 Group Term Life Insurance for Dependents.....................................................................20 How and When Coverage Stops.......................................................................21 Terminationof Coverage...................................................................................................21 Continuation of Coverage..................................................................................................21 ConversionPrivilege.........................................................................................................21 General Provisions....................................................................................................23 Claims..............................................................................................................................23 Beneficiary........................................................................................................................25 Misstatements....................................................................................................................25 Definitions.......................................................................................................................26 Colorado Sample Certificate 8/4/03 Schedule of Benefits This Schedule of Benefits is a SAMPLE. The provisions shown in this sample Schedule of Benefits may not represent the benefits quoted.' Actual group certificates will reflect benefits purchased by a specific Group. This schedule is a part of the Certificate. It provides limited information about coverage. Read the Certificate carefully for further information. Group Term Life Insurance Amount: $XX75,000 For employees age 70 or older, Evidence of Insurability is required for amounts in excess of $25,000. Benefits will reduce as follows (reductions are based on the benefit amount in effect when a Certificateholder's coverage begins): • 35% at age 65 • 60% at age 70 • 72% at age 75 • 80% at age 80 Waiver of Premium for Group Term Life Insurance Total Disability must begin before age 60. Waiting period: 6 months Waiver of Premium will end when the Certificateholder reaches age 65. Refer to the "Waiver of Premium for Group Term Life Insurance" section for other reasons Waiver of Premium may end. Extension of Benefits for Group Term Life Insurance Total Disability must begin before age 60. Maximum extension period is 24 months beginning on the first day of Total Disability. Colorado Sample Certificate 8/4/03 3 SAMPLE Supplemental Group Term Life Insurance The Certificateholder has an option to purchase Supplemental Group Term Life Insurance in the amounts and subject to all the terms and conditions stated below: ' Amount: The Certificateholder may purchase an amount equal to XXI, 2, or 3 times Annual Earnings, rounded to the next higher XX$1,000 if not already an even multiple thereof. XXAnnual Earnings means the Certificateholder's annual wage or salary from the Group. Any commissions, bonuses, overtime pay or other compensation will be excluded when determining this wage or salary. Annual Earnings will be determined according to the Group's records. If a Certificateholder's Annual Earnings change after coverage is reduced, each reduction will be recalculated based on the new Annual Earnings. For employees age 70 or older, Evidence of Insurability is required for. amounts in excess of $25,000. Benefits will reduce as follows (reductions are based on the benefit amount in effect when a Certificateholder's coverage begins): • 35% at age 65 • 60% at age 70 • 72% at age 75 • 80% at age 80 Group Accidental Death and Dismemberment Insurance Principal Sum: $XX75,000 Coverage is 24-hour. Benefits will reduce as follows (reductions are based on the benefit amount in effect when a Certificateholder's coverage begins): • 35% at age 65 • 60% at age 70 • 72% at age 75 • 80% at age 80 Colorado Sample Certificate 8/4/03 SAMPLE Supplemental Accidental Death and Dismemberment Insurance Principal Sum: Each purchase of Supplemental Group Term Life Insurance includes an equal purchase of Supplemental Accidental Death and Dismemberment Insurance. , Coverage is 24-hour. Benefits will reduce as follows (reductions are based on the benefit amount in effect when a Certificateholder's coverage begins): • 35% at age 65 • 60% at age 70 • 72% at age 75 • 80% at age 80 Short Term Disability Insurance Maximum Weekly Benefit: $XX750, subject to a maximum benefit of XX66 2/3% of Weekly Earnings. Weekly Earnings means the Certificateholder's weekly wage or salary as of the date of Disability. Any commissions, bonuses, overtime pay or other compensation will be excluded when determining this wage or salary. Benefits begin on the: • 1" day of Disability due to injury • 8'h continuous day of Disability due to sickness Benefits will continue for a maximum of 26 weeks. Disabilities caused by pregnancy -related conditions, as well as Complications of Pregnancy, are covered. Occupational disabilities are not covered. Colorado Sample Certificate 8/4/03 5 SAMPLE Group Term Life Insurance for Dependents Group Term Life Insurance for Dependents is optional. This insurance applies to a Certificateholder only if the Certificateholder applied for and is paying the required premium contribution for this coverage. Spouse Benefit: $XX5,000 Child Benefit: $XX2,500 The maximum spouse benefit is the lesser of 50% of the Certificateholder's Group Term Life Insurance amount in force or $100,000. HOWEVER, if the spouse benefit would be greater than $25,000, such benefit would be effective only for a spouse whose Evidence of Insurability for such benefit was approved by us. Coverage for a spouse will end when the spouse reaches age 65. A dependent child is not covered until the child reaches age 15 days. The Dependent child age limit is the end of the calendar year in which the child attains age 19. This age is extended to the end of calendar year in which the child attains age 25 if the child qualifies as a federal tax exemption. Continuation of Coverage Coverage maybe continued beyond the date it would otherwise end up to the time period(s) shown below. All continued coverage is subject to the provisions stated in the section entitled "How and When Coverage Stops." If the Certificateholder is no longer Actively -at -Work due to layoff, Group Life Insurance and Accidental Death and Dismemberment Insurance may be continued for up to 3 consecutive months. If the Certificateholder is no longer Actively -at -Work due to leave of absence, Group Life Insurance and Accidental Death and Dismemberment Insurance may be continued for up to 3 consecutive months. If the Certificateholder is no longer Actively -at -Work due to disability, all coverage may be continued for up to 6 consecutive months. Colorado Sample Certificate 8/4/03 SAMPLE How and When Coverage Starts Eligibility Eligibility under the Group Policy is limited to Eligible Persons and Dependents. Eligible Person and Dependent are defined in the "Definitions" section. Application To enroll for coverage, an application must be submitted to us. If the application is received more than 31 days after an Eligible Person or Dependent becomes eligible, the Eligible Person or Dependent will not be enrolled until the Eligible Person provides Evidence of Insurability which is satisfactory to us. In no event will we require Evidence of Insurability for a newborn child if: birth occurs while Dependent coverage is in effect; or application for the child is received within 31 days following birth. When Coverage Starts Coverage starts on the Effective Date. Except as described in the "Delayed Effective Date" section, the Effective Date is as follows: an Eligible Person's coverage will start on the first day of the period for which premium is paid following the date the person becomes an Eligible Person, unless otherwise approved by us; a Dependent's coverage will start on the day the person becomes an eligible Dependent; and Generally, a change in amount of insurance for an Eligible Person or Dependent will become effective on the first day of the period for which premium is paid following the date of the event causing the change. Delayed Effective Date (Dependent Coverage with STD) Coverage may be delayed beyond the date it would otherwise start if - Evidence of Insurability is required. In this event, the Effective Date will be determined in accordance with our underwriting rules and regulations; or • an Eligible Person is not Actively -at -Work on the day preceding the day coverage, including an increase in an amount of insurance, would otherwise become effective. In this event, coverage for the Eligible Person will become effective on the day the eligible Person returns to Active Work. • However, in the case of Short Term Disability coverage, a Certificateholder's coverage will be effective as follows: Colorado Sample Certificate 8/4/03 7 SAMPLE If the Certificateholder was insured under a prior carrier's short term disability insurance plan within 31 days before the Group's Effective Date of coverage; and The Certificateholder is not Actively -at -Work due to injury or sickness on the date his or her coverage would otherwise become effective, then the Certificateholder will be eligible for Short Term Disability Insurance coverage on the Group's Effective Date. a Dependent is confined in a health care facility on the day preceding the day coverage, including an increase in an amount of insurance, would otherwise become effective. In this event, coverage for the Dependent will become effective when there has been a lapse of three consecutive days during which the Dependent has not been an inpatient. In no event will coverage for a Dependent start: - Before the Eligible Person's coverage starts; and - For a newborn child, before the child reaches any minimum age stated in the,"Group Term Life Insurance for Dependents" section in the Schedule of Benefits. Delayed Effective Date (Dependent Coverage without STD) Coverage may be delayed beyond the date it would otherwise start if: •, Evidence of Insurability is required. In this event, the Effective Date will be determined in accordance with our underwriting rules and regulations; or • an Eligible Person is not Actively -at -Work on the day preceding the day coverage, including an increase in an amount of insurance, would otherwise become effective. In this event, coverage for the Eligible Person will become effective on the day the eligible Person returns to Active Work. • a Dependent is confined in a health care facility on the day preceding the day coverage, including an increase in an amount of insurance, would otherwise become effective. In this event, coverage for the Dependent will become effective when there has been a lapse of three consecutive days during which the Dependent has not been an inpatient. In no event will coverage for a Dependent start: - Before the Eligible Person's coverage starts; and - For a newborn child, before the child reaches any minimum age stated in the "Group Term Life Insurance for Dependents" section in the Schedule of Benefits. Colorado Sample Certificate 8/4/03 City of Fort Collins Proposed Effective Date: 1 / 1 /2004 Proposal Date: 9/3/2003 Benefit Plan Highlights • Combined benefit maximum for Basic Term Life and Supplemental Term Life is $500,000. • Basic Term Life and Supplemental Term Life include waiver of premium for total disability beginning before age 60. Waiver terminates at age 70 or prior retirement. • For employees age 70 or over, evidence of insurability will be required for Basic Term Life amounts in excess of $25,000 and Supplemental Term Life amounts in excess of $25,000. • For employees under age 70, evidence of insurability will be required for Supplemental Term Life amounts in excess of $100,000. • Basic Term Life must be taken in order to be eligible for Supplemental Term Life. • Supplemental Term Life must be taken in order to be eligible for Supplemental AD&D. • A minimum of 30% participation is required for Supplemental Term Life and Supplemental AD&D benefits to be offered. • This proposal assumes Supplemental Term Life and Supplemental AD&D coverage is 100% employee paid. • Basic Term Life and Supplemental Term Life include a Living Benefit/Accelerated Death provision as described in the attached brochure. • Basic AD&D and Supplemental AD&D benefits include a Seat Belt Rider. • Basic Term Life, Supplemental Term Life, Basic AD&D and Supplemental AD&D benefits reduce by the following percents for class(es) 1, 2: 30% at age 65; 50% at age 70; 70% at age 75; 80% at age 80. Benefits terminate at retirement. • If police and/or fire employees make up more than 40% of the entire group, AD&D benefits for these employees will be non -occupational. • Salary based benefits are rounded up to the next $1,000. The items below pertain to Dependent Life only. • Dependent Life benefit amount cannot exceed 50% of the employee Basic Term Life amount. • Dependent Life insurance for a spouse will end when the spouse reaches age 65. • Dependent Life will require evidence of insurability for amounts in excess of $25,000. • For a dependent child, coverage begins at 15 days and ends at age 19. Coverage may be extended to age 25 for a child who qualifies as a federal tax exemption. (Refer to your Anthem Life Sales Brochure(s) for benefit details and limitations) Anthenf Life 09 SAMPLE Group Coverage Provisions Some of the coverages described in this section may not be available to a Certificateholder under the Group's Plan. Each Certificateholder's Schedule of Benefits states which coverages are available to the Certificatebolder. Group Term Life Insurance In the event of the Certificateholder's death while insured for this Group Term Life , Insurance, we will pay to the Beneficiary the Group Term Life Insurance amount stated in the Schedule of Benefits. ' We will pay the benefit after we receive notice and proof of death. The benefit will be paid in one sum unless, prior to payment, an alternate settlement option is requested by the Certificateholder or the Beneficiary. A description of settlement options is available on request. Refer to the "General Provisions" section for Beneficiary information. Living Benefit (Accelerated Benefit) If the Certificateholder is diagnosed as terminally ill or otherwise meets the requirements stated below, as defined in these provisions, the Certificateholder may elect to receive an accelerated payment of a portion of the group term life insurance benefit. This accelerated payment is called the Living Benefit. The Living Benefit is equal to 50% of the employee's Group Term Life Insurance amount, subject to a maximum of $100,000. The benefit will be calculated as of the date we receive the Certificateholder's election. Any Group Term Life Insurance for Dependents is not included in the calculation. The Living Benefit will be paid in one sum. There is no waiting period for the Living Benefit. After the Living Benefit is paid, the Certificateholder's Group Term Life Insurance amount which remains in force will be equal to the amount which would otherwise apply, reduced by the Living Benefit payment. The maximum amount of group term life insurance that may be converted according to the Conversion Privilege will be reduced to the amount remaining in force following the Living Benefit payment. The Certificateholder's Group Accidental Death and Dismemberment Insurance, if any, will not be affected by payment of the Living Benefit. Payment of the Living Benefit discharges us of all liability under the Group Policy and Certificate to the extent of the payment. Colorado Sample Certificate 8/4/03 SAMPLE Disclosure The Living Benefit may be taxable. As with all tax matters, the Certificateholder should consult a personal tax advisor to determine tax consequences prior to making an election. This Living Benefit MAY affect the Certificateholder's ability to receive certain government benefits or entitlements, such as Medicaid, because the Living Benefit MAY be considered an asset in determining eligibility. Because this Living Benefit is a part of this Certificate, the Certificateholder may be required to receive and spend all of the available funds from the Certificate prior to becoming eligible for government assistance programs. The Certificateholder's Group Term Life Insurance death benefit will be reduced if the Living Benefit is paid. Conditions The Living Benefit election must be made in writing on a form which satisfies us. To qualify for this benefit, the Certificateholder must provide evidence satisfactory to us that he/she is terminally ill. This means that the Certificateholder's life expectancy is twelve (12) months or less. The evidence must include a certification by a licensed physician. We may require, at our expense, an additional examination by a physician that we choose. Final determination of eligibility will be made by us. Exceptions We will not pay the Living Benefit if. • the Certificateholder has assigned his/her Group Term Life Insurance benefit; • all or a portion of the Certificateholder's Group Term Life Insurance is to be paid to a former spouse as a part of a divorce or dissolution agreement; or • the terminal illness is due to an intentionally self-inflicted injury or suicide attempt. Waiver of Premium For Group Term Life Insurance If the Certificateholder becomes Totally Disabled, only Group Term Life Insurance may be continued with no further premium payment. In order for insurance to be continued with waiver of premium we must receive proof satisfactory to us that the Certificateholder is Totally Disabled. In addition, the Total Disability must: begin while: - the Certificateholder is employed by the Group; - the Certificateholder is insured for Group Term Life Insurance; and - the Group Policy, and the Group's coverage under the Group Policy, is in force. Colorado Sample Certificate 8/4/03 10 SAMPLE begin before the Certificateholder reaches the age stated in the Schedule of Benefits; be continuous from the date of Total Disability to the end of the waiver of premium waiting period stated in the Schedule of Benefits, during which all required premiums must be paid; and not be due to an intentionally self-inflicted injury. Total Disability or Totally Disabled means a condition which, as certified by a Physician: • is due to an illness or injury; and • prevents the Certificateholder from performing the material and substantial duties of any occupation for wage or profit. Subject to all conditions stated above, waiver of premium will begin immediately following the end of the waiver of premium waiting period. Proof of Total Disability must be provided to us within one year after the Total Disability begins to assure this insurance is continued. If death occurs before we receive proof of Total Disability, we will pay the group term life insurance benefit if: • death occurs within the one-year period; and • we receive proof that Total Disability was continuous from the date of Total, Disability to the date of death. Proof of continued Total Disability must be provided when requested. We have the right to have the Certificateholder examined at our expense whenever reasonably necessary, but no more than once a year after two years of Total Disability. The continued Group Term Life Insurance will be subject to any benefit reductions stated in the Schedule of Benefits for Group Tern Life Insurance. Continuance of Group Term Life Insurance with waiver of premium will end on the first of the following to occur: • the date Total Disability ends; • the date proof of Total Disability is not provided when required; • the date the Certificateholder refuses to be examined when required; • the date the Certificateholder retires; or • any date stated in the Schedule of Benefits for termination of waiver of premium. Termination of the Group Policy, or the Group's coverage under the Group Policy, will not affect any continuance of Group Term Life Insurance with waiver of premium for which the Certificateholder qualified before the Group Policy ended, or the Group's coverage under the Group Policy ended. If the Certificateholder returns to work and is an Eligible Person on the date waiver of premium ends, Group Term Life Insurance will be continued subject to payment of the required premium. Colorado Sample Certificate 8/4/03 11 Mk�T , 11, _ If the Certificateholder is not an Eligible Person on the date waiver of premium ends, Group Term Life Insurance will end. Group Term Life Insurance may them be converted to individual life insurance. For further information, refer to the provision entitled "Cpnversion Privilege." If the conversion privilege is exercised, and it is later determined that the Certificateholder qualifies for waiver of premium for Group Term Life Insurance, the individual policy may be returned to us with a request for continuance of Group Term Life Insurance with waiver of premium. Under these circumstances, insurance will be continued during the Total Disability according to all conditions stated here. We will refund any premiums paid for the individual policy. We will consider the Beneficiary to be the same as the one in effect under the individual policy, unless otherwise requested. Extension of Benefits For Group Term Life Insurance If the Certificateholder becomes Totally Disabled, Group Term Life Insurance may be extended. The maximum extension period, if any, is shown is the Schedule of Benefits. In order for insurance to be extended: • we must receive proof satisfactory to us that the Certificateholder is Totally Disabled; • the Total Disability must begin while the Certificateholder is insured for group term life insurance and the Group's coverage under the Group Policy is in force; • the Total Disability must begin before the Certificateholder reaches any age limit shown in the Schedule of Benefits. • the Total Disability must not be due to intentionally self-inflicted injury; and • we must continue to receive the required Group Term Life Insurance premium. Total Disability means a condition which, as certified by a physician: • is due to illness or injury; and • prevents the Certificateholder from performing the material and substantial duties of any occupation for wage or profit. If death occurs before we receive proof of Total Disability, we will pay the Group Term Life Insurance benefit if: • death occurs within any maximum extension period; and • we receive proof that Total Disability was continuous from the date of Total Disability to the date of death. This extension of benefits will be subject to any benefit reductions stated in the Schedule of Benefits for Group Term Life Insurance. This extension of benefits for Group Term Life Insurance does not include any continued coverage for Group Accidental Death and Dismemberment Insurance. This extension of benefits will end on the date the first of the following occurs: • the date Total Disability ends; • the maximum extension period ends; Colorado Sample Certificate 8/4/03 12 SAMPLE • the date the Certificateholder retires; or • the Group Policy, or the Group's coverage under the Group Policy, ends. If the Certificateholder is an Eligible Person on the date the extension of benefits ends, Group Term Life Insurance will be continued subject to payment of the required premium. If the Certificateholder is not an Eligible Person on the date the extension of benefits ends, Group Term Life Insurance will end. Group Term Life Insurance may then be converted to individual life insurance. For further information, refer to the provision entitled "Conversion Privilege for Group Term Life Insurance." If the conversion right is exercised, and it is later determined that the Certificateholder qualifies for extension of benefits, the Certificateholder may return the individual policy to us with a request for extension of benefits. Under these circumstances, insurance will be extended during the Total Disability according to all conditions stated here. We will refund any premiums paid for the individual policy. We will consider the Beneficiary to be the same as the one in effect under the individual policy, unless otherwise requested. Supplemental Group Term Life Insurance All provisions which apply to Group Term Life Insurance also apply to Supplemental Group Term Life Insurance, unless otherwise stated in these provisions or the Schedule of Benefits. We will not pay Supplemental Group Tenn Life Insurance benefits for any supplemental amount purchased within two years prior to the date of death, if death is caused by the Certificateholder's suicide. In the event of suicide, any premium paid for Supplemental Group Tenn Life Insurance purchased within one year prior to the date of death will be refunded. Colorado Sample Certificate 8/4/03 13 SAMPLE Group Accidental Death and Dismemberment Insurance If a Certificateholder dies or loses a body member within ISO days of an Accident, we will pay the amount for the loss stated in the table below, provided: • the Accident occurs while the Certificateholder is insured for this Group Accidental Death and Dismemberment Insurance; and • the loss is a result of the Accident and not any other cause . An Accident means the unforeseen consequences of a deliberate or involuntary act. We will pay benefits for any loss, other than life, to the Certificateholder. We will pay the benefit for loss of life to the same Beneficiary who is to receive life insurance benefits. Refer to the "General Provisions' section for Beneficiary information. Table of Losses And Benefits Loss Benefit Loss of Life Principal Sum Loss of Two Members Principal Sum Loss of One Member One-half the Principal Sum The principal sum is shown in the Schedule of Benefits. The total amount of benefits for two or more losses resulting from the same Accident will be limited to the principal sum. In the table, "loss of member" means loss of a hand or foot or loss of an eye. "Loss of a hand or foot" means a hand or foot is separated at or above the wrist or ankle joint. "Loss of an eye" means total and irrecoverable loss of sight in one eye. Seat Belt Benefit We will pay an additional benefit if the Certificateholder dies as a result of an automobile Accident. We will pay this additional benefit if, at the time of the Accident, the Certificateholder is: • driving or is a passenger in any private passenger automobile designed for use on public roads; and • wearing an original equipped factory installed or manufacturer -authorized and unaltered seat belt or lap and shoulder restraint approved by the National Highway Traffic Safety Administration. This additional benefit will be equal to 10% of the Principal Sum, subject to a maximum benefit of $15,000. Colorado Sample Certificate 8/4/03 14 SAMPLE A police report of the Accident will be required to determine whether a properly installed seat belt or lap and shoulder restraint was in use, Non -covered Losses We will not pay accidental death and dismemberment benefits for a loss caused by or connected with any of the following: • suicide or self-inflicted injury committed or inflicted while sane or insane (in Missouri, while sane); • disease, illness, physical or mental impairment, medical or surgical treatment, diagnostic or preventive care (unless such treatment or care is provided in connection with an accidental injury), or infection (except infection of an accidentally caused wound); • taking any drug or chemical unless taken as prescribed by a physician or as, directed by the pharmaceutical manufacturer; • auto -erotic asphyxiation; • taking part in, committing, or attempting to commit an assault or felony; • duty as a member of any military, naval or air organization; • taking part in a riot or in any declared or undeclared war, • flying in any aircraft as a pilot or crew member; • experimental flying or flying for the purpose of training; • riding, driving or testing a vehicle used in a race or speed contest; • taking part in the sports of parachute jumping, skydiving or hang gliding; or • operating a motor vehicle while under the influence of alcohol or drugs, as defined by state law. The Schedule of Benefits indicates whether accidental death and dismemberment coverage is 24-hour or nonoccupational. 24-hour coverage provides for Accidents which are associated with employment or occupation, as well as Accidents which are not. Nonoccupational coverage provides only for Accidents which are not associated with employment or occupation. Supplemental Accidental Death and Dismemberment Insurance The Schedule of Benefits indicates whether the Certificateholder has an option to purchase Supplemental Accidental Death and Dismemberment Insurance. All provisions which apply to Group Accidental Death and Dismemberment Insurance also apply to Supplemental Accidental Death and Dismemberment Insurance, unless otherwise stated in the Schedule of Benefits. Colorado Sample Certificate 8/4/03 15 Short Term Disability Insurance We will pay short term disability benefits to the Certificateholder if the Certificateholder loses income due to a Disability. In order to receive short term disability benefits: • the Certificateholder must be under the regular care of a physician; • the physician must provide proof satisfactory to us that the Certificateholder is Disabled; and • the Disability must begin while: - the Certificateholder is employed by the Group; - the Certificateholder is insured for this short term disability insurance; and - the Group Policy, and the Group's coverage under the Group Policy, is in force. Disability means that due to sickness or injury, the Certificateholder is limited from performing some or all of the material and substantial duties of his or her regular occupation and has at least a 20% loss of his or her pre -disability earnings. Material and substantial duties means duties that are normally required for the performance of the occupation and cannot be reasonably omitted or changed. The definition of disability also presumes that: • the disability begins while the Certificateholder is covered by this benefit; and • the loss of a professional or occupational license or certification does not, by itself, mean the Certificateholder is disabled. Benefit Determination We will+reduce the amount we pay by Deductible Income the Certificateholder receives, and may adjust the amount we pay for any income the Certificateholder earns or receives from any form of employment during the Disability. The Weekly Benefit will be figured as follows: Step 1: Multiply the Certificateholder's weekly pre -disability earnings by the benefit percentage shown in the Schedule of Benefits. Step 2: Compare the amount from Step I to the Maximum Weekly Benefit shown in the Schedule of Benefits. The lesser of those amounts is the gross weekly benefit. Step 3: Subtract from the gross weekly benefit any Deductible Income. The resulting amount is the Weekly Benefit. If the Certificateholder is Disabled and working, earning between 20% and 80% of his or her pre -disability earnings, the Weekly Benefit will be prorated according to the percentage of income he or she is losing due to the Disability. The payment will be calculated as follows for each week: Step 1: Subtract the Certificateholder's current earnings from his or her pre -disability earnings. Colorado Sample Certificate 8/4/03 16 SAMPLE Step 2: Divide the answer from Step 1 by the Certificateholder's pre -disability earnings. This is the percentage of lost earnings. Step 3: Multiply the Weekly Benefit (as figured above) by the answer from Step 2. This is the amount we will pay. The minimum weekly payment after adjusting for Deductible Income and current earnings is $25. We will not adjust the Weekly Benefit for current earnings if the current weekly earnings are less than 20% of the Certificateholder's pre -disability weekly earnings. The Certificateholder will no longer be considered disabled under this plan if his or her current weekly earnings exceed 80% of pre -disability weekly earnings. If the Certificateholder's current earnings vary widely from week to week, we may average his or her earnings over the past three weeks to determine whether benefit payments should continue. We will not pay short term disability benefits for any week during which the Certificateholder's actual current earnings exceed 80% of pre -disability earnings. In this situation, we will consider the period of Disability to be over when the Certificateholder's average current earnings from the last three weeks exceed 80% of pre -disability earnings. Benefit Duration and Termination Benefits will begin as shown in the Schedule of Benefits. Benefit payments will be made every other week. If a covered period of Disability ends with a partial week of Disability, the benefit paid will be one -seventh of the weekly benefit for each day of the partial week. The Schedule of Benefits states the Maximum Weekly Benefit allowed for each week and the Maximum Benefit Period for which we will pay benefits during one period of Disability. In applying these maximums, each day of Disability counts as a full day regardless of whether the Certificateholder is working during the Disability, provided the Certificateholder meets the definition of Disability. We will not make separate benefit payments for more than one Disability at a time. There is no limit to the number of times benefits are payable for separate periods of Disability. We will consider two or more successive periods of Disability to be separate periods of Disability only if the Certificateholder returns to Active Work between the periods of Disability for the required time period. • If the two periods of Disability are due to the same or related conditions, the return to Active Work must be at least two weeks. • If we determine that the two periods of Disability are due to entirely unrelated causes, the return to Active Work must be at least one day. Benefit payments under this plan will end on the earliest of the following dates: • the date the Certificateholder is no longer Disabled as defined in this plan; • the end of the Maximum Benefit Period; Colorado Sample Certificate 8/4/03 17 SAMPLE the date the Certificateholder fails to submit proof of continuing Disability, the date the Certificateholder would be able to work in his or her regular occupation on a part-time basis earning 20% or more of his or her pre -disability earnings but chopses not to do so; or • the date the Certificateholder would be able to increase current earnings to 80% or more of his or her pre -disability earnings by increasing the number of hours worked or the number of duties performed in his or her regular occupation but chooses not fo do so. Termination of the Group Policy, or the Group's coverage under the Group Policy, will not affect any short term disability benefits for which the Certificateholder qualified before the termination. Proof of Disability and Income Proof of continued Disability must be provided when we request it. We may require the Certificateholder to be examined by a physician or vocational expert of our choice, as often as it is reasonable to do so. We will pay for any examinations we require. We may require the Certificateholder to provide proof of his or her current weekly earnings as often as, it is reasonable to do so. We will adjust the weekly payment based on each week's earnings. The Certificateholder must also provide proof of current Deductible Income when we request it. As part of the proof of earnings and Deductible Income during Disability we may require appropriate financial records which we believe are necessary to substantiate the Certificateholder's income. ' Deductible Income means all other earned income the Certificateholder receives except any income from employment. Deductible Income must be payable as a result of the same Disability for which the Certificateholder is receiving payments from us, except for retirement benefits. Deductible Income includes: • any amount the Certificateholder receives from the employer's sick leave'or formal salary' continuation plan; • any disability income benefits the Certificateholder receives or is eligible to receive under any compulsory benefit act or law, or any other group insurance plan; • any amounts the Certificateholder receives under any unemployment compensation law; and • any benefits the Certificateholder receives from the employer's retirement plan which are: - received as disability benefits; or - voluntarily received as retirement benefits; or - received as retirement benefits once the Certificateholder reaches age 62 or the normal retirement age as defined in the employer's retirement plan. Retirement Plan means a defined contribution plan or defined benefit plan. These are plans that provide retirement benefits to employees and are not funded entirely by employee contributions. Disability benefits under a retirement plan are benefits that are paid due to disability and which do not reduce the retirement benefit that would have been paid if the disability had not occurred. Retirement benefits under a retirement plan are benefits that are Colorado Sample Certificate 8/4/03 18 City of Fort Collins Proposed Effective Date: 1/l/2004 Proposal Date: 9/4/2004 Disability Insurance offered by Anthem Life Insurance Company Schedule of Benefits — LTD Option 1 Class Description LTD Benefit Elimination Period Maximum Payment Duration All full-time employees working 20 or 66 2/3% of Pre- Reducing Benefit 1 more hours per week, excluding Disability Earnings 90 days Duration (RBD) uniformed police and fire. Benefit Plan Highlights — LTD Option 1 • This rate provides $100 or 10% Minimum Monthly Benefit. • Maximum Benefit is $4,500. • Definition of Disability is 24 month Own Occupation with Residual. • Work Benefit is 24 months. • Pre -Existing Condition Limitation is 3/12 Exclusion. • LTD benefits integrate with Family Social Security Benefits. • Survivor Benefit is 3 months. • Disability due to Mental Illness or Substance Abuse is limited to 24 months. Disability due to Self -Reported Symptoms is unlimited. • LTD rate is based on a Non -Contributory plan. A minimum of 100% of eligible employees must participate. If plan should change to Contributory, an adjustment to the rate will be necessary. • Continuity of Coverage (no loss/no gain) is included, provided that a complete copy of the prior carrier's policy is submitted to Anthem Life. • Group must be in business 1 year to be eligible for benefits. • The pro osed Long Term Disabili rate is paranteed for 2 Years. Standard Provisions — L7 L Untion 1 • Full Maternity Benefits • Workplace Modification • Waiver of Premium • Vocational Rehabilitation • Accumulation of Elimination Period • Social Security Assistance • 6 Month Recurrent Disability • Cost of Living Freeze (Super Freeze for groups in CT, KS, MD, MN and MO Anthem Life 09 SAMPLE paid based on the employer's contribution to the retirement plan. Disability benefits that reduce the retirement benefit under the plan will also be considered a retirement benefit. Regardless of how the retirement funds from the plan are distributed, for the purposes of figuring the benefits payable under this plan we will consider retirement benefits resulting from employee and employer contributions to be distributed simultaneously throughout the Certificateholder's lifetime. We will not reduce payments for amounts the Certificateholder rolls over or transfers to an . eligible retirement plan. Eligible retirement plan is defined in Section 402 of the internal Revenue Code, including any future amendments. Deductible Income does not include amounts received from any of the following: • 401(k) plans; • profit sharing plans; • thrift plans; • tax sheltered annuities; • stock ownership plans; • non -qualified plans of deferred compensation; • credit or franchise disability insurance; • individual disability insurance plans; • pension plans for partners; • military pension and military disability income plans; • a retirement plan from another employer; • individual retirement accounts (IRA); or • informal salary continuation plans. If the Certificateholder receives any of the Deductible Income in a lump sum payment, we, will pro' -rate the lump sum on a weekly basis over the time period for which the sum was. given. If no time period is stated, the sum will be pro -rated on a weekly basis to the end of the Maximum Benefit Period. We have the right to estimate the amount of benefits the Certificateholder may be eligible to receive as income from government benefits or insurance benefits that are included in Deductible Income. We may reduce our payments to the Certificateholder by this estimated amount if the Certificateholder: • has not been awarded or denied such benefits; or • has been denied such benefits and the denial is being appealed; or • is reapplying for such benefits. We will not reduce our payments to the Certificateholder by these estimated amounts if the Certificateholder: • applies or reapplies for benefits and appeals any denial of benefits through all administrative levels we believe are necessary; and • signs our payment option form stating that he or she promises to reimburse us for any overpayment of benefits caused by an award, to the extent permitted by law. Colorado Sample Certificate 8/4/03 19 SAMPLE If we reduce our payments to the Certificateholder by an estimated amount, we will: • adjust our payments when the Certificateholder gives us proof of the actual amount awarded; or • give the Certificateholder a lump sum refund of the estimated amount if the Certificateholder was denied benefits and has completed all appeals or reapplication we believe are necessary. Risks Not Covered No short term disability benefits are payable if income is not lost due to the Disability. No short term disability benefits are payable for a Disability caused by, contributed to by, or resulting from any of the following: • an intentionally self-inflicted injury; or • participation in an assault or felony; or • an act of war; or • illness or injury caused by or during any employment for wage or profit, if the Certificateholder is eligible for coverage under Worker's Compensation or occupational disease law. Pregnancy and Complications of Pregnancy Coverage is provided for Disability caused by Complications of Pregnancy, as described below. Refer to the short term disability insurance section of the Schedule of Benefits to determine if Disability caused by other pregnancy -related conditions is covered. Complications of Pregnancy means conditions which are adversely affected by pregnancy and which require a Hospital admission. Complications of Pregnancy include: non -elective caesarian section; toxemia with or without convulsions (pre-eclampsia or eclampsia); ectopic pregnancy; and spontaneous termination of pregnancy during a period of gestation in which viable birth is not possible. All other conditions must be distinct from the diagnosis of pregnancy in order to be considered Complications of Pregnancy, such as: acute nephritis; cardiac decompensation; missed abortion; and similar medical and surgical conditions of comparable severity. Complications of Pregnancy will not include: false labor; occasional spotting; physician prescribed rest during the period of pregnancy; morning sickness; hyperemesis gravidarum; and similar conditions associated with the management of a difficult pregnancy. Group Term Life Insurance for Dependents In the event of the death of a Dependent while insured for this Group Term Life Insurance for Dependents, we will pay the Group Term Life Insurance amount stated in the Schedule of Benefits for the Dependent. We will pay the Group Tenn Life Insurance amount when we receive proof of the Dependent's death. The Certificateholder will always be considered the Beneficiary for Group Term Life Insurance benefits for dependents. Payment will be made in one sum. Colorado Sample Certificate 8/4/03 20 OWN How and When Coverage Stops The provisions in this section apply to all group'coverage except as otherwise specified. Termination of Coverage Group coverage ends for a Certificateholder and his/her Dependents on the earliest of the following dates: ' • the date the Group Policy is ended; • the date coverage for the Group is ended under the Group Policy; • any termination date stated for the Certificateholder in the coverage description appearing in the Schedule of Benefits; or • the day before the monthly premium due date on which: - the Certificateholder no longer meets the definition of an Eligible Person (for example, the Eligible Person retires or otherwise ends employment or is no longer in an eligible class); or - the Certificateholder fails to pay any premium contribution due. In addition to the above dates, coverage ends for a Dependent on the following dates: • the date that a Dependent no longer satisfies the definition of a Dependent; or, • the date stated in the Schedule of Benefits as a termination date for any Dependent coverage. Continuation of Coverage The Group may continue coverage beyond the date it would otherwise end only as described in the Schedule of Benefits. All continued coverage is subject to payment of the required premium by or through the Group. All continued coverage must be provided by the Group under a plan which is nondiscriminatory in nature. Termination of the Group Policy, or of the Group's coverage under the Group Policy, will terminate any continued coverage. Conversion Privilege For Group Life Insurance, a Covered Person has the right to convert (change Group Life Insurance to individual whole life insurance) if the Covered Person's Group Life Insurance ends: because the Covered Person's coverage ends for a reason other than the Group Policy ending or changing, or the Group's coverage under the Group Policy ending or changing. The coverage may be converted by applying to us in writing within 31 days after the coverage ends and paying the premium due on the new policy. The new policy will be an individual life insurance policy. The Covered Person may choose to be insured for the same amount as insured under the Group Policy, or less. The new premium amount will be figured according to the age and the class of risk to which the Certificateholder belongs. We will not require Evidence of Insurability. The new Colorado Sample Certificate 8/4/03 21 SAMPLE policy will become effective on the date the Group Life Insurance ends, if application and premium were received as required above. I I , • because the Group Policy ends or changes, or the Group''s coverage under the Group Policy ends or changes. The Covered Person may convert the Group Life Insurance which has been in effect under the Group Policy for, at least five years. Except for ,the amount of insurance that may be converted, the rights of conversion and the donditions that must be met are the same as those in the preceding paragraph. The'amount of insurance that may be converted will not be more than: - the amount the Covered Person was insured for under the Group Policy minus any other coverage under a new or reinstated group life policy which becomes available within 31 days after the end of, or a change in; the Group Policy or the Group's coverage under the Group Policy; or - $2,000; whichever is less. If the Covered Person's death occurs after group coverage ends, but within the 31-day period during which the Covered Person can exercise the conversion right, we will pay the Covered Person's Beneficiary whether or not the Covered Person applied to convert the insurance. The benefit paid will be the amount the Covered Person could have converted. However, no death benefit will be payable under these provisions if the death benefit is payable under any other provisions of the Group Policy. Colorado Sample Certificate 8/4/03 22 SAMPLE General Provisions Claims Proof of claim We are not liable under the Group Policy unless we receive written proof of claim. The proof must be filed with us within 90 days after the date of loss and must have the data we need to determine benefits. Failure to give us proof within 90 days will not void or reduce the benefit if it is shown that the proof was given as soon as reasonably possible. No proof can be submitted later than one year after the usual 90-day filing period ends, except in the absence of legal capacity. Claim Forms Claim forms usually are available from the Group. If forms are not available, a person may send a written request for claim forms to us. Claim forms will be sent to the person within 15 days. If the person does not receive the claim forms, written proof covering the details of the loss for which the claim is made may be submitted to us without the claim form. Time of Payment of Claims After receipt of written proof of claim, amounts payable for disability benefits will be paid every other week. Any balance remaining unpaid at the end of the period for which we are liable will be paid immediately when we receive a written claim showing proof of loss. Physical Examination and Autopsy We have the right to have a Covered Person examined by a physician of our choice at our expense whenever reasonably necessary while a claim is pending. We may request an autopsy in case of death if this is not forbidden by law. Claims Review Upon our receipt of written proof of claim from the Covered Person or Beneficiary (referred to in this provision as "claimant'), we have: 90 days in which to determine and notify the claimant of our decision regarding a death claim; and 45 days in which to determine and notify the claimant of our decision regarding any other claim. In special circumstances, an additional 90-day period may be added to the 90-day determination period for a death claim, and up to two periods of 30 days each may be added to the 45-day determination period for any other claim. If the claim is a special circumstance, we will notify the claimant in writing of the additional time needed. Colorado Sample Certificate 8/4/03 23 SAMPLE For questions about benefits, a claim payment, or a claim denial, the claimant may contact us in writing, in person, or by telephone. However, if the claimant is not satisfied with our claim decision, he or she should send us a written appeal. Written appeals regarding death claims must be received' in our office within 60 days, after the claimant receives our initial decision, and for any other claims, written appeals must be received within 180 days. All written appeals should request another review of the 00m, outline the problem and all previous efforts to resolve the matter, and include, any previously unsubmitted ddcuments, records, information, or proof in support of the claim. Except in special circumstances, the claimant will receive a written answer within 60 days after we receive an appeal regarding a death claim, and within 45 days after we receive an appeal regarding any other claim. In special circumstances, an additional 60 days for a death claim, and an additional 45 days for any other claim, may be added to these respective deadlines. If the appeal -based review is a special cirbumstance, we will notify the claimant in writing of the additional time needed. Release of Information The Certificateholder agrees that we may request, and anyone may give to us, any information, (including copies of records) about the Covered Person's illness or injury for which benefits are claimed. Also, that we may give similar information if requested to anyone providing similar benefits to the Covered Person. Limitation of Actions No legal action may be taken to recover benefits within 60 days after proof of claim has been given. No such action may be taken later than 3 years after expiration of the time within which proof of claim is required according to the "Proof of Claim" section. Beneficiary The Beneficiary for the Certificateholder's Group Term Life Insurance is the person the Certificateholder names. The initial Beneficiary is named on the application. The Certificateholder may change the named Beneficiary at any time by notifying us in writing. The notice must provide the name of the new Beneficiary and the date that the change is to be effective. If the effective date for the change is not provided, the change will be effective on the date the notice is received. If death occurs before a notice of change is received, we will not change any payment we have already made before the notice was received. The Certificateholder may name more than one Beneficiary. The Certificateholder may also designate primary and contingent Beneficiaries. If a primary Beneficiary dies before the Certificateholder, payment will be made to any designated contingent Beneficiary. Colorado Sample Certificate 8/4/03 24 SAMPLE If two or more Beneficiaries are named and their respective share of the benefit is not stated, the benefit will be divided equally. If a Beneficiary dies before the Certificateholder, that Beneficiary's share will pass to the surviving Beneficiaries equally. If a Beneficiary is not named or if no Beneficiary is surviving, we will pay the benefits to the Certificateholder's estate, or at our option, to: • the surviving spouse; otherwise • the surviving children equally; otherwise • the surviving parent(s) equally; otherwise • the surviving brother(s) and/or sister(s) equally; otherwise • any person who verifies to us that they have incurred funeral or other expenses related to the Covered Person's last illness or death. The payment to this person will not exceed $500, or the maximum allowed by law, not to exceed $5,000. if the Certificateholder and the Beneficiary die from the same accident, and the order of deaths cannot be determined, we will pay the benefit as though the Certificateholder survived the Beneficiary. If any person who is to receive a benefit payment is a minor or is not legally competent, then the benefit payment will be made to the person's legally appointed guardian. Misstatements All statements contained in an application, in the absence of fraud, are deemed representations and not warranties. Any misstatement used to reduce a benefit, deny a claim, or void insurance must be contained in a written application, a copy of which is provided to the person who made it, or in the event of the person's death, the Beneficiary. This provision, other than on account of fraud, applies only to Life Insurance after the person's coverage has been effective for 2 years or more. Except as stated below for life insurance, we reserve the right to cancel or rescind coverage for any Covered Person who engages in misrepresentation and/or fraudulent conduct in relation to any claims made for coverage or any application for coverage under the Group Policy. For life insurance, if a Covered Person's age is misstated, we will pay the correct life insurance benefit(s) which apply to the Covered Person's actual age. In addition, the life premium rate will be adjusted so that the premium paid rate will be adjusted so the premium paid would have been correct for the Covered Person's actual age. We may make this change back to the date coverage became effective based on the misstated information. No misstatement, except for misstatement of age, may be used to contest life insurance after it has been in force prior to the contest for a period of two years during the person's lifetime. We will not use any statement in a contest unless the statement is contained in a written instrument signed by the Covered Person and a copy of the statement has been given to the Covered Person, their beneficiary or personal representative. Colorado Sample Certificate 8/4/03 25 SAMPLE Definitions This section defines terms which have special meanings. If a word or phrase has a special meaning or is a title, it starts with a capital letter. The work or phrase is defined in this section or at the place in the text where it is used. Actively -at -Work or Active Work — Reporting to a Certificateholder's regular place of employment for the Group and carrying out the regular duties of his occupation for the number of hours required to meet the definition of Eligible Person. The Certificateholder will be considered Actively -at -Work on each day of a regular paid vacation or on a regular non -working day provided that the person was Actively -at -Work on the last working day. Benericiary(ies) —The person(s) to whom we pay life' and accidental death insurance benefits. Certificate — A description of benefits provided under the Group Policy to the Certificateholder. Certificateholder — An Eligible Person who has enrolled for coverage. Covered Person(s) — The Certificateholder and any covered Dependents. Dependent — A Covered Person other than the Certificateholder who is: the Certificateholder's spouse; the Certificateholder's or spouse's unmarred child (includes natural child, adopted child or a stepchild); an unmarried child who is related to the Certificateholder or the Certificateholder's spouse (such as a niece, nephew or grandchild), or a child for whom either is the legal guardian. These children must live with the Certificateholder and be allowed as a federal tax exemption. Any minimum or maximum age is stated in the Schedule of Benefits. Effective Date — The date when coverage begins. Eligible Person — A person who: • is a member of an eligible class and has satisfied the Group's eligibility waiting period; • is an employee working the required number of hours per week on a regular basis, as documented on the Group's federal or state payroll records; and • is Actively -at -Work, except as provided in the Continuation of Coverage section. An Eligible Person may also include a retiree under the Group's formal retirement program but only if retiree coverage is approved by us. Colorado Sample Certificate 8/4/03 26 SAMPLE Evidence of Insurability — A statement of an individual's present medical condition and past medical history and other relevant information, on a form approved by us, that indicates a person is acceptable for insurance, as we may determine. Group — The entity named as the "Group" on the Certificate cover. If no Group is specifically named, then the Group is the Policyholder (as indicated in the Certificate "Introduction".) Group Life Insurance — Any of the following coverages which may be in force for the Certificateholder under the Group Policy: Group Term Life Insurance; Supplemental Group Term Life Insurance; and Group Term Life Insurance for Dependents. Colorado Sample Certificate 8/4/03 27 I i I i i ' I i I 1 i i 1 1 I AnthemLife Anthem Life Insurance Company 1801 Watermark Drive, Suite 200 Columbus, Ohio 43215-7088 P.O. Box 182361 Columbus, Ohio 43218-2361 614-436-0688 800-551-7265 City of Fort Collins Proposed Effective Date: l/l/2004 Proposal Date: 9/4/2004 Schedule of Benefits — LTD Option 2 Class Description LTD Benefit Elimination Period Maximum Payment Duration All full-time employees working 20 or 60% of Pre -Disability Reducing Benefit 1 more hours per week, excluding Earnings 90 days Duration (RBD) uniformed police and fire. Benefit Plan Highlights — LTD O tion 2 • This rate provides $100 or 10% Minimum Monthly Benefit. • Maximum Benefit is $4,500. • Definition of Disability is 24 month Own Occupation with Residual. • Work Benefit is 24 months. • Pre -Existing Condition Limitation is 3/12 Exclusion. • LTD benefits integrate with Family Social Security Benefits. • Survivor Benefit is 3 months. • Disability due to Mental Illness or Substance Abuse is limited to 24 months. Disability due to Self -Reported Symptoms is unlimited. • LTD rate is based on a Non -Contributory plan. A minimum of 100% of eligible employees must participate. If plan should change to Contributory, an adjustment to the rate will be necessary. • Continuity of Coverage (no loss/no gain) is included, provided that a complete copy of the prior carrier's policy is submitted to Anthem Life. • Group must be in business 1 year to be eligible for benefits. • The ELoeosed Long Term Disabili rate is &ELanteed for 2 Years. htandard Provisions — LTIJ UDtIOn 2 • Full Maternity Benefits • Workplace Modification • Waiver of Premium • Vocational Rehabilitation • Accumulation of Elimination Period • Social Security Assistance • 6 Month Recurrent Disability • Cost of Living Freeze (Super Freeze for groups in CT, KS, MD, MN and MO Sample Long Term Disability Insurance Policy Anthem Life Ov SAMPLE GROUP LONG TERM DISABILITY INSURANCE POLICY Policyholder: XX Group Policy Number: XX Policy Effective Date XX' Premium Due Dates: First day of each month Governing Jurisdiction: XX Policy Anniversary: XX Initial Monthly Premium: $.XX per $100 of Monthly Covered Payroll Policy Insured By: Anthem Life Insurance Company, referred to as the Company, we, us, and our. We will provide the benefits under this policy in consideration of the application and premium. We make this promise subject to all of the provisions of this policy. Read this policy carefully and contact us promptly if you have questions. This policy is delivered and is governed by the laws of the state of policy issue and to the extent applicable by the Employee Retirement Income Security Act of 1974 (ERISA) and any amendments. y This policy consists of: • all policy provisions and any amendments and/or attachments issued • employees' signed applications • the certificate of coverage. This policy may be changed in whole or in part. Only an officer of ours can approve a change. The approval must be in writing and endorsed on or attached to this policy. No other person, including any agent, may change this policy or waive any part of it. Signed for us at Indianapolis, Indiana on the policy effective date. ANTHEM LIFE INSURANCE COMPANY Main Administrative Office: Box 182361, Columbus, Ohio 43218-2361 John J. Gainor, President Nancy L. Purcell, Secretary RENEW-LTD-P 1299 ER-1 SAMPLE INTRODUCTION This policy is divided into two sections: • the employer section • the employee section Both sections together form the policy and include all of the benefits available under a plan. Whenever we use the terms "you or your" in the employer section, we mean the employer. ER-2 SAMPLE LONG TERM DISABILITY POLICY DETAILS i These are details concerning your policy: Plan Effective Date: xx Divisions, Subsidiaries or Affiliated Companies Include: xx Initial Rate: $.XX per $100 of monthly covered payroll Rate Guarantee: A change in the premium rate will not take effect prior to xx, or 12 months following the policy effective date, whichever is later. However, the premium rate may change prior to this time for reasons that affect the insured risk, which includes: • a change occurs in a plan of benefits • a division, subsidiary, or affiliated company is added or deleted • the number of employees insured by a plan changes by 25% or more • a new law or a change in any existing law is enacted which applies to a plan. We will notify you in writing at least 31 days before a premium rate change is effective. A change may take effect on an earlier date if you agree to it. ER-31- Rev 3/99 SAMPLE LONG TERM DISABILITY POLICY DETAILS (continued) When do you need to pay premium? Premium payments are due on the plan effective date, and the first day of each calendar month after the plan effective date. We must receive all premiums on or before the date the premium is due. You must pay premium in United States dollars. Waiver of Premium: Premium payments for coverage under this plan are suspended for an insured while the insured is receiving payments under this long term disability plan. ER-4L SAMPLE EMPLOYER PROVISIONS i WHEN DO YOU MAKE PREMIUM CHANGES? If employee status changes occur during a policy month then you must report the changes on the next premium due date following the change. Any premium increase or decrease will be adjusted and will become due at this same time, but will not tie pro- rated daily. ' If you pay premium on other than a monthly basis, 'changes in premiums will result in a monthly pro -rated adjustment on the next premium due date. We will adjust premiums for the current policy year and the prior policy year unless changes are the result of fraudulent information. WHAT INFORMATION DO WE REQUIRE OF YOU? You must give us the following on a regular basis: • information about your employees - who are eligible to become insured - whose amounts of coverage changed, including salary increase and decrease information - whose coverage ends • occupational information and any other information that we may reasonably require. Your records that we believe have a bearing on coverage under this plan are open for our review at any reasonable time. y Clerical error or omission will not: • prevent an employee from receiving coverage; • affect the amount of an insured's coverage; OR • effect or continue an insured's coverage if it should not be in effect or continue in effect. Eft-5 SAMPLE EMPLOYER PROVISIONS (continued)' WHEN CAN THIS POLICY OR A PLAN UNDER THIS POLICY BE CANCELED? This policy or a plan under this policy can be canceled: • by us; or • by you. We may cancel or offer to modify this policy or a plan, with at least 31 days written notice, when: • the employees pay all or a part of the cost of their coverage and less than 75% of the employees eligible for coverage are participating in a plan • you are paying the full cost of coverage and less than 100% of the employees eligible for coverage are participating in a plan • you do not promptly provide us with information that we need • this policy has been in effect more than 12 months , • you fail to perform any of your obligations that relate to this policy • fewer than 10 employees are insured for coverage under this policy or a plan • you fail to pay any premium within the 31 day grace period Plar means a line'of congagp a under this Pali" r� . If you do not pay the premium during the grace period, this policy or plan will terminate automatically on the last day for which premium was paid. You are responsible for paying premium for coverage in effect during the grace period. You must pay us all premium due for the full period each plan is in effect. We reserve the right to review and terminate all classes covered under a plan if any class(es) cease(s) to be covered. You may cancel this policy or a plan by giving us written notice at least 31 days before you intend the policy or plan to end. Cancellation can occur on an earlier date, if we agree. If this policy or a plan is canceled, the cancellation will not affect a payable claim. If this policy or a plan is canceled, coverage will end at 12:01 a.m. on the last day of coverage. ER-6 SAMPLE I' EMPLOYER PROVISIONS (continu6d) I I I I CAN A PLAN BE CHANGED? You must give us advance notice of a request to change a plan. WHAT IF STATUTES IN THE STATE OF POLICY ISSUE CHANGE? Any provision of this policy which, on or after the policy effective date, conflicts with the statutes of the state of policy issue or any federal statutes, is hereby amended to comply with the minimum requirements of such statute. CAN THE VALIDITY OF THIS POLICY BE DISPUTED? The validity of this policy shall not be disputed after the policy has been in effect for two years from the policy effective date, except in situations when: premium has not been paid; OR for fraudulent misrepresentations. Disputing the validity of this policy shall be prohibited if statements made by the applicant in applying for this policy do not appear in a written document signed by the person making the statement. A copy of the written document must be given to the person making the statement. n ER-7 Sample Certificate Group Long Term Disability Anthem Life Ow li SAMPLE ONLY This Certificate is a SAMPLE. It includes all provisions routinely available for purchase. The provisions shown in this sample certificate may not represent the benefits, quoted. Actual group certificates will reflect benefits purchased by a specific Group. Policyholder: XX Group Policy Number: XX Class: XX GROUP LONG TERM DISABILITY RENEW-LTD-C 12199 C-1 Standard Sample Certificate Anthem Life VOL UNTARY GROUP TERM LIFE EMPLOYEE BENEFITS PROGRAM FOR City of Fort Collins An ideal way of enhancing your employee benefits package through affordable group rates and payroll deduction Proposed Effective Date: 1/1/2004 Presented By: Anthem Life Date: 9/4/2004 SAMPLE Introduction Anthem Life Insurance Company (referred to as the Company "we" "us" or "our") welcomes you as a client. This is your certificate of coverage as long as you are eligible for coverage and you become insured. You will want to read it carefully and keep it in a safe place. Your certificate of coverage is written in plain English. There are a few terms and provisions written as required by insurance law. If you have any questions about any of the terms and provisions, please consult our claims paying office. We will assist you in understanding your benefits. If the terms and provisions of the certificate of coverage (issued to you) differ from the policy (issued to the Policyholder), the policy will govern. Your coverage may be canceled or changed in whole or in part under the terms and provisions of the policy. The policy is delivered in and is governed by the laws of xx and to the extent applicable by the Employee Retirement Income Security Act of 1974 (ERISA) and any amendments. When making a benefit determination under the policy, we have discretionary authority to determine your eligibility for benefits and to interpret the terms and provisions of the policy. For purposes of effective dates and ending dates under the group policy, all days begin at 12:00 midnight and end at 12:01 a.m. at the policyholder's address. ANTHEM LIFE INSURANCE COMPANY Main Administrative Office: Box 182361, Columbus, Ohio 43218-2361 John J. Gainor, President RENEW-LTD-C 1299 C-1 2 Standard Sample Certificate SAMPLE TABLE OF CONTENTS Your certificate is divided into the following sections: SECTION 1 - HIGHLIGHTS OF YOUR PLAN SECTION 2 - GENERAL INFORMATION SECTION 3 - ELIGIBILITY FOR COVERAGE SECTION 4 - BENEFIT SPECIFICS • disability defined • details on calculating benefit payments • exclusions and limitations that may apply SECTION 5 - CLAIM INFORMATION For your ease in finding information in your certificate, we: • Start each section with a summary of the contents and the terms we define in the section. • Italicize all of the defined terms within a section. C-2 3 Standard Sample Certificate SAMPLE SECTION 1: HIGHLIGHTS OF YOUR LTD PLAN This is a brief overview of your plan of benefits. We refer to these terms often throughout this certificate. Whenever we use these terms in the certificate, they have the following meaning, unless we advise you otherwise. The HIGHLIGHTS OF YOUR LTD PLAN section will include a brief overview of the benefits selected by the employer, and will include a description of eligible class to whom the certificate applies, benefit percentage, maximum and minimum payment amounts, elimination period, earnings definition, maximum payment duration, waiting period, contributory or noncontributory, and waiver of premium. 4 Standard Sample Certificate SAMPLE SUMMARY OF THE GENERAL INFORMATION SECTION 2 What will you find in this section? • information we have access to • how we use statements made in applying for coverage • insurance fraud • time limits for legal proceedings What terms do we define in this section? • you • we • us • our • employee • employer • insured • plan EE-2-Summary 5 Standard Sample Certificate SAMPLE SECTION 2: GENERAL INFORMATION WHAT IS THE CERTIFICATE OF COVERAGE? This certificate of coverage is a written statement prepared by us and may include attachments. It tells you: • the coverage to which you may be entitled • to whom we make payments AND • the limitations, exclusions and requirements applying to a plan. You means an employee who is eligible for the coverage of this plan. We, us and our means the Insurance Company named on the first page of your Certificate of Coverage. Employee means a person who is a citizen or permanent resident of the United States or Canada in active employment with the employer unless we advise you otherwise. This plan excludes temporary and seasonal workers from coverage. Employer means individual, company or corporation where you are in active employment, and includes any division, subsidiary or affiliated company named in the policy. Insured means a person covered under this plan. Plan means a line of coverage under the policy. EE-2-1 Rev 5/98 6 Standard Sample Certificate SAMPLE SECTION 2: GENERAL INFORMATION (Continued) WHAT INFORMATION DO WE HAVE ACCESS TO? The employer will give us information about you including: • if you are eligible for coverage • if your amount of coverage changes, including salary change information • if your coverage terminates • other information we may reasonably require. The employer's records that we believe have a bearing on coverage under this plan -are open for our inspection at any reasonable time. Clerical error or omission will not: • prevent you from receiving coverage • affect the amount of your coverage OR • effect or continue your coverage if it should not be in effect or continue in effect. HOW CAN WE USE STATEMENTS YOU OR THE EMPLOYER MADE IN APPLYING FOR COVERAGE? We consider any statements you or the employer made in a signed application for coverage a representation and not a warranty. If any of the statements you or the employer made are not complete and/or not true at the time they were made, we can: • reduce or deny any claim OR • cancel your coverage back to the date your coverage became effective. We will use only statements made in a signed application as a basis for doing this. You will' receive a copy of the signed application. E E-2-2 7 Standard Sample Certificate SAMPLE SECTION 2: GENERAL INFORMATION (Continued) HOW WILL WE HANDLE INSURANCE FRAUD? We promise to focus on all means necessary to support fraud detection, investigation,, and prosecution. It is a crime if you or the employer knowingly, and with intent to injure, defraud or deceive us, or file a claim containing any false, incomplete or misleading information. These actions, as well as submission of false information, will result in denial of your claim, and are subject to prosecution and punishment to the full extent under state and/or federal law. We will pursue all appropriate legal remedies in the event of insurance fraud. WHAT IF FACTS ABOUT YOU ARE NOT ACCURATE? If relevant facts about you were not accurate, then we will use accurate information to decide if your coverage should be in effect and what your amount of coverage should be. If the cost of your coverage is affected, we will make a fair adjustment in the cost. DOES THE EMPLOYER ACT AS YOUR AGENT? For all purposes of the policy, the employer acts on its own behalf or as your agent. The employer is not our agent. WHAT ARE THE TIME LIMITS FOR LEGAL PROCEEDINGS? You can start legal action regarding your claim 60 days after the date you sent us proof of claim. You have up to three years after the date you sent us proof of claim to start legal action, unless otherwise provided by law. DOES THIS PLAN REPLACE OR AFFECT ANY REQUIREMENT FOR WORKERS, COMPENSATION OR STATE DISABILITY INSURANCE? The plan does not replace or affect requirements for coverage by Workers' Compensation Insurance or state disability insurance. EE-2-3 $ Standard Sample Certificate SAMPLE SUMMARY OF THE ELIGIBILITY FOR COVERAGE SECTION 3 What will you find in this section? • eligibility for coverage • waiting period when coverage becomes effective • evidence of insurability requirements • what happens to coverage during a lay-off, leave of absence or a family or medical leave of absence • when coverage under this plan ends What terms do we define in this section? • waiting period • active employment • work site • evidence of insurability • layoff • leave of absence • family or medical leave of absence EE-3-Summary 9 Standard Sample Certificate SAMPLE SECTION 3: ELIGIBILITY FOR COVERAGE I WHEN ARE YOU ELIGIBLE FOR COVERAGE? If you are in an eligible class you may apply for coverage under this plan on the later of: the date the plan is effective OR the date you complete the waiting period. WHAT IS YOUR WAITING PERIOD? Your waiting period appears in the PLAN HIGHLIGHTS. Waiting period is the number of days you must'be in active employment in an eligible class before you may apply for coverage. If you have been continuously employed by the employer but were not in an eligible class, we will apply any prior period of work with the employer toward the waiting period. Active employment means you are: • working for the employer at your work site for earnings the employer pays on a regular basis, AND • performing the material and substantial duties of your regular occupation. Active employment includes normal non -work days such as vacation, weekends and holidays. Your work site must be: • the employer's usual place of business; • an alternative location if directed by the employer, OR • a location to which your occupation requires you to travel. EE-3-1 10 Standard Sample Certificate SAMPLE SECTION 3: ELIGIBILITY FOR COVERAGE (continued) WHEN DOES YOUR COVERAGE BECOME EFFECTIVE? Your coverage will be effective on the day determined as follows: If you apply for coverage within the first 31 days after the date you are first eligible to apply AND -you are paying for some or all of the cost of your coverage OR -you are not paying for any of the cost of your coverage THEN your coverage is effective on the date you apply. THEN your coverage is effective on the date you are eligible. EE-3-2 11 Standard Sample Certificate With today's working environment being more diverse than ever before, you and your employees have a personal and professional need for financial security. For over 25 years ANTHEM LIFE has been satisfying those needs. Licensed in 16 states, our success is based on a long history of social responsibility, strong leadership, sound investments and innovative products and services. Through our creativity, flexibility and innovation, Anthem Life excels in meeting your employees needs through customization, administration and service. Our Voluntary Group Term Life program is designed to provide you and your employees with the maximum benefits at minimal cost. These benefits are as follows: * 100% Employee Paid * Accelerated Death * Guaranteed Issue Benefit * Low Group Rates * Children's Coverage * Portability/Conversion * 2 Year Rate Guarantee * Employee and Spouse * Optional Waiver of Coverage Premium In addition, Anthem Life provides a variety of group insurance programs, including Group Term Life with Accidental Death & Dismemberment and Dependent Life, Long Term Disability, Short Term Disability, Voluntary Group Term Life with Matching VAD&D, Voluntary AD&D, Voluntary Short Term Disability, Voluntary Long Term Disability. We appreciate the opportunity to assist you with your employee benefits planning and encourage you to review all information concerning Anthem Life's Product portfolios. For more information please contact your representative or Anthem Life at 1-800-873- 2258. SAMPLE SECTION 3: ELIGIBILITY FOR COVERAGE (continued) WHEN IS EVIDENCE OF INSURABILITY REQUIRED? You will need to provide evidence of insurability to us with your application if you: • apply for coverage more than 31 days after the date you are first eligible to apply; OR • voluntarily terminate your coverage and want to reapply for coverage; OR • apply for an amount of coverage for which we require proof of insurability. You must apply for coverage in writing through the employer and use an application form that is satisfactory to us. Your coverage will be effective on the date we approve your application. Evidence of insurability means a statement of your medical history which we will use to assess if you will be approved for coverage. WHAT IF YOU ARE NOT IN ACTIVE EMPLOYMENT ON THE DATE YOUR COVERAGE WOULD BE EFFECTIVE? ' If you are not in active employment as a result of your injury or a sickness then, your coverage will be effective on the date you return to active employment. This applies to your initial coverage, as well as any increases or additions to coverage occurring after your initial coverage is effective. WILL YOUR COVERAGE CONTINUE IF YOU ARE ON A LAY-OFF OR LEAVE OF ABSENCE? Your employer may continue your coverage if you are on a lay-off or on an approved leave of absence. Your coverage may continue through the end of the month following the month in which your layoff or leave of absence begins. The cost of your coverage must be paid during the layoff or leave of absence period. Layoff or leave of absence means the employer has agreed in writing and in advance to a temporary absence from active employment for a specified period of time. Your normal vacation time or any period of disability is not considered a temporary layoff or leave of absence. EE-3-3 12 Standard Sample Certificate SAMPLE SECTION 3: ELIGIBILITY FOR COVERAGE (continued) WHAT HAPPENS TO YOUR COVERAGE IF YOU ARE ON A FAMILY OR MEDICAL LEAVE OF ABSENCE? If you are on a family or medical leave of absence, your coverage will be governed by the employer's Human Resource policy on family and medical leaves of absence. We will continue your coverage if the following conditions are met: • premiums for the cost of your continued coverage are paid; AND • your leave is approved in advance and in writing by the employer. Your coverage will continue for up to the greater of: the leave period required by the Federal Family and Medical Leave Act of 1993, and any amendments; OR • the leave period required by applicable state law. While you are on an approved family or medical leave of absence, we will use earnings from your regular occupation you were performing just prior to the date your leave of absence started to determine our payments to you. If your coverage does not continue during a family or medical leave of absence, then when you return to active employment: • you will not have to meet a new waiting period, including'a waiting period for coverage of a pre-existing condition; AND • you will riot have to give us evidence of insurability to reinstate the coverage you had in effect before your leave began. Family and medical leave of absence means a leave of absence for the birth, adoption or foster care of a child, or for the care of your child, spouse or parent who has a serious health condition as those terms are defined by the Federal Family and Medical Leave Act of 1993 and any amendments, or by applicable state law. EE-3-4 13 Standard Sample Certificate SAMPLE SECTION 3: ELIGIBILITY FOR COVERAGE (continued) I I I I I I WHEN DOES YOUR COVERAGE UNDER THIS PLAN END? Your coverage under this plan will end on the earliest of the following: • the date the policy or plan terminates • the date you are no longer in an eligible class • the date your class is no longer eligible for coverage the last day for which ,premium for your coverage has been paid the date you cease active employment due to a labor dispute, including but not limited to strike, work slowdown, or lockout the date you cease active employment with the employer, unless you are disabled or on an approved layoff or leave of absence. We will provide coverage for a payable disability claim that occurs while you are covered under the policy or plan. u EE-3-5 14 Standard Sample Certificate SAMPLE SUMMARY OF THE LONG TERM DISABILITY BENEFIT SPECIFICS SECTION 4 What will you find in this section? what disability means when monthly payments start returning to work during the elimination period requirements of care from a doctor when will we not cover a disability what happens if the employer changes insurance plans our payment if you are disabled and not working our payment if you are disabled and working what are (and are not) other income amounts cost of living increases to any other income amounts payment limitations when monthly payments stop temporary recovery What terms do we define in this section? disability material and substantial duties occupation sickness injury elimination period regular care doctor pre-existing condition treatment prior group insurance plan maximum monthly payment gross monthly payment minimum monthly payment retirement plan disability benefits under a retirement plan retirement benefits under a retirement plan normal retirement age eligible retirement plan mental illness substance abuse maximum payment duration EE-4L-Summary 15 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS WHAT DOES DISABILITY MEAN? Disability means that due to sickness or injury. 1. you are not able to perform some or all of the, material and substantial duties of your regular occupation and you have at least a 20% loss in your pre -disability earnings, OR 2. while you are not able to perform some or all of the material and substantial duties of your regular occupation, you are working in any occupation and have at least a 20% loss in your pre -disability eamings. I I , ' The definition of disability also presumes: • your disability begins while you are covered under the plan; • that the loss of a professional or occupational license or certification does not, by itself, mean you are disabled; I , • any occupation will include your regular occupation. Material and substantial duties are the duties that: • are normally required for the performance of the occupation; AND • cannot be reasonably omitted or changed. You will no longer be considered disabled under this plan when you are able to increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation but you do not do so. extended own occ w/ residual EE-4L-1.1 16 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS WHAT DOES DISABILITY MEAN? Disability means that due to sickness or injury you are not able to perform any of the material and substantial duties of your regular occupation through the elimination period; and 1. following the elimination period, you are not able to perform some or all of the material and substantial duties of your regular occupation and you have at least a 20% loss in your pre -disability earnings. OR 2. following the elimination period, while you ate not able to perform some or a0 of the material and substantial duties of your regular occupation, you are working in any occupation and have at least a 20% loss in your pre -disability earnings. The definition of disability also presumes: • your disability begins while you are covered under the plan; • that the loss of a professional or occupational license or certification does not, by itself, mean you are disabled; • any occupation will include your regular occupation. Material and substantial duties are the duties that. • are normally required for the performance of the occupation; AND • cannot be reasonably omitted or changed. You will no longer be considered disabled under this plan when you are able to increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation but you do not do so. extended own occ. w/o residual through EP EE-4L-1.2 17 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS WHAT DOES DISABILITY MEAN? Disability means that due to sickness or injury: 1. you are not able to perform some or all of the material and substantial duties of your regular occupation and you have at least a 20% loss in your pre -disability earnings. OR 2. while you are not able to perform some or all of the material and substantial duties of your regular occupation, you are working in any occupation and have at least a 20% loss in your pre -disability earnings. We will continue payments to you beyond xx 12 xx 24 xx 36 xx 60 months if due to the same sickness or injury: 1. you are not able to perform the material and substantial duties of any gainful occupation. OR 2. while you are not able to perform some or all of the material and substantial duties of your regular occupation, you are working in any occupation and have at least a 20% loss in your pre -disability earnings. The definition of disability also presumes: • your disability begins while you are covered under the plan; • that the loss of a professional or occupational license or certification does not, by itself, mean you are disabled; • any occupation will include your regular occupation. Material and substantial duties are the duties that: • are normally required for the performance of the occupation; AND • cannot be reasonably omitted or changed. You will no longer be considered disabled under this plan when you: • are able to increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation, but you do not do so; • have received 12 or more months of payments from us, and you are able to: 1. work in a gainful occupation, part-time or full-time, but you do not do so; 2. increase your current earnings working full-time or part-time in any gainful occupation but you do not do so. limited own occ w/ residual EE-4L-1.3 Rev 9/96 18 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS WHAT DOES DISABILITY MEAN? Disability means that due to sickness or injury you are not able to perform any of the material and substantial duties of your regular occupation through the elimination period; and ' 1. following the elimination period, you are not able to perform some or all of the material and substantial duties of your regular occupation and you have at least a 20% loss in your pre -disability earnings. OR 2. following the elimination period, while you are not able to perform some or all of the material and substantial duties of your regular occupation, you are working in any occupation and have at least a 20% loss in your pre -disability earnings. We will continue payments to you beyond xx12 xx 24, xx 36 xx 60 months if Niue to the' same sickness or injury. 1. you are not able to perform the material and substantial duties of any gainful occupation. OR 2. while you are not able to perform some or all of the material and substantial duties of your regular occupation, you are working in any occupation and have at least a 20% loss in your pre -disability earnings. The definition of disability also presumes: • your disability begins while you are covered under the plan; • that the loss of a professional or occupational license or certification does not, by itself, mean you are disabled; • any occupation will include your regular occupation. Material and substantial duties are the duties that. • are normally required for the performance of the occupation; AND • cannot be reasonably omitted or changed. You will no longer be considered disabled under this plan when you: • are able to increase the number of hours you work or the number of duties you perform, in your regular occupation but you do not do so. • have received 24 or more months of payments from us, and you are able to: 1. work in a gainful occupation, part-time or full-time, but you do not do so; 2. increase your current earnings working full-time or part-time in any gainful occupation but you do not do so. limited own occ w/o residual through the EP EE-4L-1.4 Rev 9/96 19 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS WHAT DOES DISABILITY MEAN? Disability means that due to sickness or injury. 1. you are not able to perform some or all of the ,material and substantial duties of your regular occupation and you have at least a 20% loss in your pre -disability earnings., OR 2. while you are not able to perform some or all of the material and substantial duties of. your regular occupation, you are working in' any occupation and have at least a 20% loss in your pre -disability eamings. II I ' We will continue payments to you beyond 24 months if you remain disabled as defined above; and • you are continuously not able to perform one or more activities of daily living (ADL), without stand-by help; OR • you have a cognitive impairment, OR • you have a terminal illness. The definition of disability also presumes: • your disability begins while you are covered under the plan; • that the loss of a professional or occupational license or certification does not, by itself, mean you are disabled; • any occupation will include your regular occupation. Material and substantial duties are the duties that: • ate normally required for the performance of the occupation; AND • cannot be reasonably omitted or changed. You will no longer be considered disabled under this plan when you are able to: • increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation, but you do not do so. • continuously perform all of the ADLs without stand-by help. limited own occ/ADL w/ residual EE-4L-1.5 20 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS WHAT DOES DISABILITY MEAN? Disability means that due to sickness or injury you are not able to perform any of the material and substantial duties of your regular occupation through the elimination period; and 1. following the elimination period, you are not able to perform some or all of the material and substantial duties of your regular occupation and you have at least a 20% loss in your pre -disability earnings. OR 2. following the elimination period, while you are not able to perform some or all of the material and substantial duties of your regular occupation, you are working in any occupation and have at least a 20% loss in your pre -disability earnings. We will continue payments to you beyond 24 months if you remain disabled' as defined above; and you are continuously not able to perform one or more activities of daily living (ADL), without stand-by help; OR • you have a cognitive impairment; OR you have a terminal illness. The definition of disability also presumes: • your disability begins while you are covered under the plan; • that the loss of a professional or occupational license or certification does not, by itself, mean you are disabled; • any occupation will include your regular occupation. Material and substantial duties are the duties that: are normally required for the performance of the occupation; AND • cannot be reasonably omitted or changed. You will no longer be considered disabled under this plan when you are able to: • increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation, but you do not do so. • continuously perform all of the ADLs without stand-by help. limited own occ/ADL w/o residual through EP EE-4L-1.6 21 Standard Sample Certificate Many employees have a real need for more life insurance but cannot afford the cost of a traditional individual policy. Unfortunately, employers may feel they can't afford to provide this additional coverage. Now there is an affordable, flexible and convenient Group Term Life insurance plan from ANTHEM LIFE that provides coverage alone or in addition to an existing employer -provided group life plan. This is an extra benefit employees want and need that employers can offer at no additional cost to the company. Customized for Individual Needs Each person has different financial objectives and protection requirements. Voluntary Group Term Life allows the employee to choose the insurance amount that best meets his or her specific needs. Coverage is available for the employee, spouse and dependent children. Affordable The employee pays 100% of the premium, at low group rates. The portability feature allows them to continue the coverage even after employment ceases, provided the group policy remains in effect. Convenient Premiums are automatically paid through payroll deductions. SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) Regular occupation means the occupation, as it is performed nationally, that you are routinely performing when your disability begins. Your regular occupation does not mean the job you are performing for a specific' em, ployer or at a specific location. Sickness means an illness or disease. It also includes an injury which occurs before you are insured. Injury means a bodily injury that occurs while you are ,insured and is the direct result of an accident and not related to any other cause. I use when disability is own occ only or when disability includes ADL EE-4L-2.1 22 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) Regular occupation means the occupation, as it is performed nationally, that you are routinely performing when your disability begins. Your regular occupation does not mean the job you are performing for a specific 'employer. or at a specific location. Gainful occupation means an occupation, considering your past training, education and experience or for which you can be trained, that provides or can be expected to provide you, within 12 months of your return to work, with an income (before taxes) at least equal to your gross monthly payment. Sickness means an illness or disease. It also includes an injury which occurs before you are insured. Injury means a bodily injury that occurs while you are insured and is the direct result of an accident and not related to any other cause. 8 use when disability contains a gainful occupation period EE-4L-2.2 23 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) Activities of daily living (ADL) means: • bathing - the ability to wash oneself in either a tub or shower, or by sponge bath; including the tasks of getting into and out of the tub or shower with or without the assistance ,of equipment, • dressing - the ability to put on, take off, and secure all necessary and appropriate items of clothing and any necessary braces or artificial limbs, • toileting - the ability to get to and from the toilet, get on and off the toilet, and perform associated personal hygiene with or without the assistance of equipment, • transferring - the ability to move in and out of a bed, chair or wheelchair with or without the assistance of equipment, • mobility - the ability to walk or wheel on a level surface from one room to another with or without the assistance of equipment, • eating - the ability to get nourishment into the body by any means once it has been prepared and made available to one with or without the assistance of equipment, • continence - the ability to voluntarily maintain control of bowel and/or bladder function or in the event of incontinence, the ability to maintain a reasonable level of personal hygiene. Cognitive impairment means you have a deterioration or loss in intellectual capacity, resulting from injury, sickness, Alzheimer's disease or similar forms of irreversible dementia and you need another person's active help or verbal guidance for your own protection or for the protection of others. The deterioration or loss will be based on clinical evidence and/or clinical tests, according to generally accepted medical standards, that reliably measure your impairment. Terminal illness means a diagnosed illness that, according to generally accepted medical standards, is expected to result in death within six months. Stand-by help means you must have hands-on (active) help from another person with all or most of the activity. use w/ ADL disability EE-4L-2.3 Rev 5/98 24 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) DOES YOUR DISABILITY NEED TO CONTINUE FOR A PERIOD OF TIME BEFORE OUR PAYMENTS TO YOU BEGIN? Your disability must continue through the elimination period before we begin making payments to you. Elimination period is a period of continuous days of disability. The elimination period begins on the first' day of your disability. WHAT HAPPENS IF YOU RETURN TO WORK DURING THE ELIMINATION PERIOD? We will consider your disability continuous if you: return to your regular occupation for up to 30 days; AND • become disabled again due to the same sickness or injury. The days you are not disabled will not count toward the elimination period. il acc of ep = 30 days EE-4L-3.1 25 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) DOES YOUR DISABILITY NEED TO CONTINUE FOR A PERIOD OF TIME BEFORE OUR PAYMENTS TO YOU BEGIN? Your disability must continue through the elimination period before we begin making payments to you. Elimination period is a period of continuous days of disability. The elimination period begins on the first day of your disability. WHAT HAPPENS IF YOU RETURN TO WORK DURING THE ELIMINATION PERIOD? We will consider your disability continuous if you: • return to your regular occupation for up to 7 days; AND • become disabled again due to the same sickness or injury. The days you are not disabled will not count toward the elimination period. acc of ep = 7 days EE-4L-3.2 26 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) DO YOU NEED TO BE UNDER THE CARE OF A DOCTOR? We require you to be under the regular care of a doctor for the sickness or injury causing your disability in order to be eligible to receive payments from us. Regular care means: you personally visit a doctor as often as is medically required to effectively manage and treat your disabling condition(s), according to generally accepted medical standards; AND • you are receiving appropriate treatment and' care, according to generally accepted medical standards. Treatment and care for the sickness or injury causing your disability must be given by a doctor whose specialty or experience is appropriate. Doctor means a person: • regularly performing tasks that are within the limits of the person's medical license; AND • who is licensed to practice medicine and prescribe and administer drugs or to perform surgery; • with a doctoral degree in Psychology (Ph.D. or Psy.D.) and whose primary practice is treating patients; • who is a legally qualified medical practitioner according to the laws and regulations of the jurisdiction in which regular care is being given. We will not recognize you, your spouse, children, parents, or siblings as a doctor for a claim you submit. EE-4L-4 27 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) MAY WE REQUIRE YOU TO BE EXAMINED OR INTERVIEWED BY INDIVIDUALS OTHER THAN THE DOCTOR PROVIDING REGULAR CARE? We may require you to be examined by doctor(s), other medical practitioner(s) or vocational expert(s) of our choice. We will pay for this examination. We can require an examination as often as it is reasonable to do so. In addition, we may require an interview with you by an authorized representative of ours. WHEN WILL WE NOT COVER A DISABILITY? We will not cover a disability if it is due to: • war, declared or not, or any act of war; • intentionally self-inflicted injuries; • your active participation in a riot; • your attempt to commit or your commission of a felony under federal or state law. No benefits are payable for any period of disability during which you are incarcerated in a penal or correctional facility for a period of 30 or more consecutive days. If your professional or occupational license or your certification is suspended, revoked or surrendered, loss of your license or certification, by itself, does not mean you are disabled. EE-41--5 Rev. 12/96 28 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) , WHEN WILL WE COVER A DISABILITY DUE TO A PRE-EXISTING CONDITION? We will cover your disability if it is caused by, contributed to by or results from a pre-existing condition and your disability b'egins:, • after you have gone at least 6 consecutive months after the effective date of your coverage without treatment for the pre-existing condition; OR • after you have been insured for 12 consecutive months after the effective date of your coverage. If you do not meet these time period requirements, your disability is excluded from coverage under this plan. I ' Pre-existing condition is a sickness or injury. • for which you received treatment, OR • where symptoms were present to the degree that an ordinarily prudent person would seek treatment, within the three months prior to your effective date of coverage. Treatment includes: • consulting with a doctor • receiving care or services from a doctor or from other medical professionals a doctor recommends you see • taking prescribed medicines • being prescribed medicines • you should have been taking prescribed medicines but chose not to • receiving diagnostic measures. 3/6/1 2 pre-x EE-4L-6.1 29 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHEN WILL WE COVER A DISABILITY DUE TO A PRE-EXISTING CONDITION? We will cover your disability if it is caused by, contributed to by or results from a pre-existing condition and your disability begins after you have been insured for 12 consecutive months after the effective date of your coverage. If you do not meet this time period requirement, your disability is excluded from coverage under this plan. Pre-existing condition is a sickness or injury: • for which you received treatment; OR • where symptoms were present to the degree that an ordinarily prudent person would seek treatment, within the three months prior to your effective date of coverage. Treatment includes: • consulting with a doctor • receiving care or services from a doctor or from other medical professionals a doctor recommends you see • taking prescribed medicines • being prescribed medicines • you should have been taking prescribed medicines but chose not to • receiving diagnostic measures. 3/12 pre-x EE-4L-6.1.1 Rev 4/99 30 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHEN WILL WE COVER A DISABILITY DUE TO A PRE-EXISTING CONDITION. We will cover your disability if it is caused by, contributed to by or results from a pre-existing condition and your disability begins: • after you have gone at least 6 consecutive months after the effective date of your coverage without treatment for the pre-existing condition, OR ' • after you have been insured for 24 consecutive months after the effective date of your coverage. If you do not meet these time period requirements, your disability is excluded from coverage under this plan. Pre-existing condition is a sickness or injury: • for which you received treatment; OR • where symptoms were present to the degree that an ordinarily prudent person would seek treatment; within the 12 months prior to your effective date of coverage. Treatment includes: • consulting with a doctor • receiving care or services from a doctor or from other medical professionals a doctor recommends you see • taking prescribed medicines • being prescribed medicines • you should have been taking prescribed medicines but chose not to • receiving diagnostic measures. 12/6/24 pre-x EE-4L-6.2 31 Standard Sample Certificate COVERAGE AMOUNTS: Employee & Spouse: $10,000 to $300,000 in $10,000 increments. Spouse coverage terminates at age 70. Employee coverage reduces to 50% at age 70 and terminates at retirement. Dependent Children: Unmarried dependent children between the age of 15 days to 23 years (age 25 if a student) who are not in active military service are also eligible, provided the employee or spouse is approved for coverage. The benefit amount is $5,000. The benefit amount for dependent children age 15 days to 6 months is 10% of the selected children's coverage amount. If both employee and spouse are applying, only the employee may cover the children. Eligibility: Groups are eligible if they have 100 or more regularly scheduled permanent employees working a minimum of 20 hours per week. Minimum participation is 15% of the eligible employees. Coverage is effective on the premium due date following application approval for employees who are actively at work and have satisfied their eligibility period. If an employee is not actively at work, coverage begins the second day after return to full-time employment. If a spouse or child is in a medical care facility on the scheduled effective date, his/her insurance becomes effective the day following final discharge. SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) I 1 WHEN WILL WE COVER A DISABILITY DUE TO A PRE-E'XISTING CONDITION? I We will cover your disability if it is caused by, contributed to by or results from a pre-existing condition and your disability begins after ypu have been insured for 24, consecutive months after the effective date of your, coverage. if you do not medt'this time period requirement, your disability is excluded from coverage under this plan. I I , Pre-existing condition is a sickness or injury: • for which you'received treatment, OR • where symptoms were present to the degree that an ordinarily prudent person would seek treatment, ' within the 12 months prior to your effective date of coverage. Treatment includes: • consulting with a doctor • receiving care or services from a doctor or from other medical professionals a doctor recommends you see • taking prescribed medicines • being prescribed medicines • you should have been taking prescribed medicines but chose not to • receiving diagnostic measures. 12/24 pre-x EE-4L-6.2.1 Rev 4/99 32 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFITS (continued) WHEN WILL WE COVER A DISABILITY DUE TO A PRE-EXISTING CONDITION? We will cover your disability if it is caused by, contributed to by or results from a pre-existing condition, and your disability begins after you have been in active employment for 5 consecutive days after the effective date of your coverage. If you do not meet this time period requirement, your disability is excluded from coverage under this plan. Pre-existing condition is a sickness or injury. • for which you received treatment; OR • where symptoms were present to the degree that an ordinarily prudent person would seek treatment; within the thirty days prior to your effective date of coverage. Treatment includes: • consulting with a doctor • receiving care or services from a doctor or from other medical professionals a doctor recommends you see • taking prescribed medicines • being prescribed medicines • you should have been taking prescribed medicines but chose not to • receiving diagnostic measure 5-day pre-x EE-4L-6.3 33 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHAT IF THE EMPLOYER CHANGES INSURANCE PLANS AND YOU ARE NOT IN ACTIVE EMPLOYMENT DUE TO AN INJURY OR SICKNESS ON THE EFFECTIVE DATE OF THIS PLAN? Continuity of Coverage We will cover you under this plan if you were insured by the prior group insurance plan, and the cost of your coverage under the prior group insurance plan was paid. Our payments to you will be limited to the monthly amount'the prior group insurance plan would have paid you had the plan stayed in effect. Our payments will be reduced by any amount the prior group insurance plan is responsible for paying. Prior group insurance plan means the group long term disability plan in effect with the employerjust before the effective date of this plan. a EE-4L-7 34 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHAT IF YOU WERE INSURED BY THE PRIOR GROUP INSURANCE PLAN AND BECOME DISABLED UNDER THIS PLAN DUE TO A PRE-EXISTING CONDITION? Continuity of Coverage If you were insured by the prior group insurance plan just before you become eligible for coverage under this plan; you are in active employment; and you are insured under this plan, then you may be eligible for payments from us under'this plan if your disability is due'to a pre- existing condition. In order to receive payments from us, you must meet the pre-existing condition exclusion of: • this plan; OR • the prior group insurance plan had the plan stayed in effect. We will consider the total amount of time you were continuously insured under both the prior group insurance plan and this plan to determine if you satisfy the pre-existing condition exclusion. If you cannot satisfy the pre-existing condition exclusion of either plan then we will not pay you a disability benefit. We will determine our payments to you using the provisions of this plan, but your monthly payment will not be more than the maximum monthly payment of the prior group insurance plan. Your monthly payments will end on the earlier of the following dates: the end of the maximum payment duration under this plan; OR • the date benefits would have ended under the prior group insurance plan if the plan had stayed in effect. EE-4L-8 35 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND NOT WORKING OR DISABLED AND WORKING, EARNING LESS THAN 20% OF YOUR PRE -DISABILITY EARNINGS? Our payment will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: Compare this amount to the maximum monthly payment for this plan. Step 3: Take the lesser of the amounts from Steps 1 and 2. This is your gross monthly payment. Step 4: Subtract from the gross monthly payment any other income amounts except any income you earn or receive from any form of employment. This is the payment that you may receive. HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND WORKING, EARNING BETWEEN 20% AND 80% OF YOUR PRE -DISABILITY EARNINGS? Our payment to you will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: From 100% of your monthly pre -disability earnings subtract any other income amounts including current income you earn or receive from any form of employment. Step 3: Compare the results from Steps 1 and 2 with the maximum monthly payment for this plan. Step 4: The payment you may receive is the lesser of the amounts from Step 3. Your loss of earnings must be as a result of or due to the same sickness or injury for which you are disabled. EE-4L-9.1 36 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND NOT WORKING OR DISABLED AND WORKING, EARNING LESS THAN 20% OF YOUR PRE -DISABILITY EARNINGS? Our payment will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: Multiply your monthly pre -disability earnings by 70%. Subtract any other income amounts except any income you earn or receive from any form of employment. Step 3: Compare the results from Steps 1 and 2 with the maximum monthly payment for this plan. Step 4: The payment you may receive is the lesser of the amounts from Step 3. HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND WORKING, EARNING BETWEEN 20% AND 80% OF YOUR PRE -DISABILITY EARNINGS? Our payment to you will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: From 100% of your monthly pre -disability earnings subtract any other income amounts including current income you earn or receive from any form of employment. Step 3: Compare the results from Steps 1 and 2 with the maximum monthly payment for this plan. Step 4: The payment you may receive is the lesser of the amounts from Step 3. Your loss of earnings must be as a result of or due to the same sickness or injury for which you are disabled. All Sources EE-4L-9.2 37 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND NOT WORKING OR DISABLED AND WORKING, EARNING LESS THAN 20% OF YOUR PRE -DISABILITY EARNINGS? Our payment will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: Compare this amount to the maximum monthly payment for this plan. Step 3: Take the lesser of the amounts from Steps 1 and 2. This is your gross monthly payment. Step 4: Subtract from the gross monthly payment any other income amounts except any income you earn or receive from any form of employment. This is the payment that you may receive. HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND WORKING, EARNING BETWEEN 20% AND 80% OF YOUR PRE -DISABILITY EARNINGS? Our payment to you for xx12 xx 24 months will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: From 100% of your monthly pre -disability earnings subtract any other income amounts including current income you earn or receive from any form of employment. Step 3: Compare the results from Steps 1 and 2 with the maximum monthly payment for this plan. Step 4: The payment you may receive is the lesser of the amounts from Step 3. Our payment to you after xx 12 xx 24 months will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: Compare this amount to the maximum monthly payment for this plan. Step 3: Take the lesser of the amounts from Steps 1 and 2. This is your gross monthly payment. Step 4: Subtract from the gross monthly payment: -100% of any other income amounts except any income you earn or receive from any form of employment; AND -50% of any income you earn or receive from any form of employment. This is the payment that you may receive. Your loss of earnings must be as a result of or due to the same sickness or injury for which you are disabled. limited 100% EE-4L-9.3 Rev 9/96 38 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND NOT WORKING OR DISABLED AND WORKING, EARNING LESS THAN 20% OF YOUR PRE -DISABILITY EARNINGS? Our payment will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: Multiply your monthly pre -disability earnings by 70%. Subtract any other income amounts except any income you earn or receive from any form of employment. Step 3: Compare the results from Steps 1 and 2 with the maximum monthly payment for this plan. Step 4: The payment you may receive is the lesser of the amounts from Step 3. HOW MUCH WILL OUR MONTHLY PAYMENT TO YOU BE IF YOU ARE DISABLED AND WORKING, EARNING BETWEEN 20% AND 80% OF YOUR PRE -DISABILITY EARNINGS? Our payment to you for xx 12 xx 24 months will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: From 100% of your monthly pre -disability earnings subtract any other income amounts including current income you earn or receive from any form of employment. Step 3: Compare the results from Steps 1 and 2 with the maximum monthly payment for this plan. Step 4: The payment you may receive is the lesser of the amounts from Step 3. Our payment to you after xx 12 xx 24 months will be figured by using the following Steps 1 through 4: Step 1: Multiply your monthly pre -disability earnings by the benefit percentage. Step 2: Multiply your monthly pre -disability earnings by 70%. Subtract from this amount: -100% of any other income amounts except any income you earn or receive from any form of employment; AND -50% of any income you earn or receive from any form of employment. This is the payment that you may receive. Step 3: Compare the results from Steps 1 and 2 with the maximum monthly payment for this plan. Step 4: The payment you may receive is the lesser of the amounts from Step 3. Your loss of earnings must be as a result of or due to the same sickness or injury for which you are disabled. All Sources limited 100% EE-4L-9.4 Rev 9/96 39 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHAT IF YOUR CURRENT INCOME FLUCTUATES? If your current income fluctuates, we may average amounts over a three (3) consecutive month period of time. IF YOU ARE DISABLED AND WORKING, EARNING MORE THAN 80% OF YOUR PRE - DISABILITY EARNINGS, NO PAYMENT WILL BE MADE. Maximum monthly payment means the maximum monthly amount for which you are insured under this plan. Gross monthly payment means the maximum payment amount before we subtract other income amounts. Your pre -disability earnings, benefit percentage, and maximum monthly payment appear in the PLAN HIGHLIGHTS. WHAT IF YOU ARE DISABLED FOR ONLY PART OF A MONTH? Your monthly payment from us is pro -rated. This means that if you are disabled for only part of a month, you will receive a payment equal to 1/30th of a full monthly payment for each day of the month you are disabled. EE-4L-10 40 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHAT ARE OTHER INCOME AMOUNTS? These are amounts, other than payments you are receiving from us, that include: 1. any benefits and awards you receive or are eligible to receive under: a. Workers' Compensation Law b. occupational disease law C. any other similar act or law 2. any disability income benefits you receive or are eligible to receive under: a. any compulsory benefit act or law b. any other group insurance plan with the employer or with an association C. any other group insurance plan with another employer which you become insured under after your disability under this plan begins d. any governmental retirement system as a result of your job with the employer Long term disability payments are primary under this policy, meaning our payments to you will be reduced by any short term disability payments under a policy with the employer. 3. any benefits under the United States Social Security Act, The Canada Pension Plan, The Quebec Pension Plan and includes any similar plan or act. Benefits include: a. disability benefits you, your spouse, or your children receive or are eligible to receive as a result of your disability. b. retirement benefits you receive, your spouse or your children receive as a result of your receipt of retirement benefits. If your disability begins after your 70th birthday, and you were receiving Social Security retirement benefits before your disability began, then we will not reduce our payments to you by these retirement benefits. 4. any benefits you receive from the employer's sick leave or formal salary continuation plan. 5. any income you earn or receive from any form of employment. We may require you to send us proof of your income. We will adjust our payment to you based on this information. As a part of the proof of income, we can require you to send us appropriate tax and financial records we believe we need to substantiate your income. Primary/Family EE-4L-11.1 41 Standard Sample Certificate Guaranteed Issue: Guaranteed Issue is available to applicants under age 70, provided they apply within their initial eligibility period. The following chart outlines the Guaranteed Issue for your group based on the number of eligible employees: Guaranteed Issue Amount ::—::] Employees <60 Spouses <60* Employees & Spouses age 60 - 69* $30,000 $10,000 $0 Amounts in excess of Guaranteed Issue are subject to evidence of insurability. Guaranteed Issue is not available to employees age 70 and over or for spouse only coverage. Dependent Children's coverage is Guaranteed Issue provided the employee/spouse apply within the initial eligibility period. SPECIAL FEATURES Portability: This unique feature allows the insured employee and/or spouse to continue an equal amount of term insurance, at the same group rates, on a direct premium paying basis if employment terminates. Portability is a feature employees truly appreciate, since this option is more affordable than converting to an individual whole life policy. Portability is available to employees and spouses under age 70 as long as the group continues this coverage with Anthem Life. If the employee or spouse elects portability, coverage for the children may also be continued. An administrative fee will be applied to each bill sent to the insured. Coverage terminates at age 70 for the employee and spouse. SAMPLE SECTION 4: LONG TERM DISABILITY BENEFITSPECIFICS (continued) WHAT ARE OTHER INCOME AMOUNTS? These are amounts, other than payments you are receiving from us, that include: any benefits and awards you receive or are eligible to receive under: a. Workers' Compensation Law b occupational disease law C. any other similar act or law 2. any disability income benefits you receive or are eligible to receive under: a. any compulsory benefit act or law b. any other group insurance plan with the employer or with an association C. any other group insurance plan with another employer which you become insured under after your disability under this plan begins d. any governmental retirement system as a result of your job with the employer Long term disability payments are primary under this policy, meaning our payments to you will be reduced by any short term disability payments under a policy with the employer. 3. any benefits under the United States Social Security Act, The Canada Pension Plan, The Quebec Pension Plan and includes any similar plan or act. Benefits include: a disability benefits you receive or are eligible to receive. b. retirement benefits you receive. If your disability begins after your 70th birthday, and you were receiving Social Security retirement benefits before your disability began, then we will not reduce our payments to you by these retirement benefits. 4. any benefits you receive from the employer's sick leave or formal salary continuation plan. 5. any income you earn or receive from any form of employment. We may require you to send us proof of your income. We will adjust our payment to you based on this information. As a part of the proof, we can require you to send us appropriate tax and financial records we believe we need to substantiate your income. Primary EE-4L-11.2 42 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) 6. any benefits from the employer's retirement plan you: a. receive as disability benefits; b. voluntarily choose to receive as retirement benefits; C. receive as retirement benefits once you reach the greater of age 62 or normal retirement age (as defined in the employer's retirement plan). Regardless of how the retirement funds from the plan are distributed, for the purposes of figuring our payment to you, we consider employee and employer contributions to be distributed at the same time throughout your lifetime. This plan does not reduce payments you receive from us for your contributions to the employer's retirement plan, or for amounts you rollover or transfer to an eligible retirement plan. Retirement plan is a defined contribution plan or defined benefit plan. These are plans that provide retirement benefits to employees and are not funded entirely by employee contributions. Disability benefits under a retirement plan are benefits that are paid due to disability and which do not reduce the retirement benefit that would have been paid if the disability had not occurred. Retirement benefits under a retirement plan are benefits that are paid based on the employers contribution to the retirement plan. Disability benefits that reduce the retirement benefit under the plan will also be considered a retirement benefit. Eligible retirement plan is defined in §402 of the Internal Revenue Code of 1986 and includes future amendments to §402 affecting the definition. EE-4L-12 43 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) 7. any benefits for loss of time or lost wages you receive from the mandatory portion of a no-fault motor vehicle insurance plan, or automobile liability insurance policy. 8. any amounts you receive under any unemployment compensation law. 9. any amounts you receive from a third party (after subtracting attorney's fees) by judgment, settlement or otherwise. If you receive any of the other income amounts in a lump sum payment, we will pro -Sate the lump sum on a monthly basis over the time period for which the sum was given. If no time period is stated, the sum will be pro -rated on a monthly, basis to the end of your maximum payment duration. Other income amounts must be payable as a result of the same disability for which you are receiving a payment from us, except for retirement benefits and any income you earn or receive from any form of employment. WHAT IF SUBTRACTING OTHER INCOME AMOUNTS RESULTS IN A ZERO PAYMENT TO YOU? We will pay you a minimum monthly payment under this plan, subject to any overpayments. EE-4L-13 Rev.6/96 44 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) DO WE HAVE THE RIGHT TO ESTIMATE OTHER INCOME AMOUNTS? We have the right to estimate the amount of benefits you may be eligible to receive under Other Income Amounts, items 1, 2 and 3a. We can reduce our monthly payment to you by this estimated amount if you: • have not been awarded such benefits but have not been denied such benefits; OR have been denied such benefits and the denial is being appealed; OR • are reapplying for such benefits. We will not reduce our payments to you by these estimated amounts if you: apply (or reapply) for benefits and appeal your denial through all of the administrative levels we believe are necessary; AND sign our payment option form stating you promise to pay back to us any overpayment of benefits caused by an award. If we reduce our payment to you by an estimated amount: • then we will adjust our payments to you when you give us proof of the amount awarded; OR we will give you a lump sum refund of the estimated amount if you were denied benefits and have completed all appeals (or reapplications) we believe are necessary. EE-4L-14 45 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHAT ARE NOT OTHER INCOME AMOUNTS? We will not subtract from our payments to you any amounts you receive from the following: • 401(k) plans • profit sharing plans • thrift plans • tax sheltered annuities • stock ownership plans • credit disability insurance • non -qualified plans of deferred compensation • pension plans for partners • military pension and military disability income plans • a retirement plan from another employer • individual retirement accounts (IRA) • informal salary continuation plan • benefits from individual disability plans WHAT HAPPENS IF YOU RECEIVE A COST OF LIVING INCREASE TO ANY'OTHER INCOME AMOUNTS? Other than for increases in any income you earn or receive from any form of employment, once we have subtracted an other income amount from your gross disability payment, we will not further reduce our payment to you due to a cost of living increase in any other income amount. EE-4L-15 46 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHEN WILL YOU RECEIVE A LIMITED NUMBER OF PAYMENTS FROM US FOR A DISABILITY? If your disability is due to mental illness, substance abuse, xx or self -reported symptoms we wjll pay you a monthly payment for up to xx 12 roc 24 months. We will not pay you a monthly payment beyond the maximum payment duration. Mental illness means disability due to or resulting from psychiatric or psychological conditions, regardless of cause, and includes: • schizophrenia; • depression; • manic depressive or bipolar illness; • anxiety, • personality disorders, • adjustment disorders, • other conditions usually treated by a mental health provider or other qualified provider using psychotherapy, psychotropic drugs or other similar methods of treatment. Substance abuse means a pattern of pathological use of alcohol or other addictive drugs unless prescribed by a doctor and used by you as prescribed. Xx Self -reported symptoms means the manifestations of your condition, which you tell your doctor, that are not verifiable using tests, procedures or clinical examinations accepted on a standard basis in the practice of medicine. Examples of self -reported symptoms include, but are not limited to headaches, pain, fatigue, stiffness, soreness, ringing in ears, dizziness, numbness and loss of energy. This limitation does not apply to dementia, if due to: • stroke; • trauma; • viral infection; • Alzheimer's disease; • other such conditions not listed above which are not usually treated by a mental health provider using psychotherapy; psychotropic drugs or other similar methods of treatment. EE-41--16 Rev 9/96 47 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHEN WILL OUR PAYMENTS TO YOU STOP? We will stop payments on the earliest of the following dates: • the date you are no longer disabled according to this plan; • the date you reach the end of the maximum payment duration; • the date your current earnings exceed 80% of your pre -disability earnings. If your current earnings fluctuate, we may average your current earnings over a three (3) consecutive month period of time instead of stopping your payment on the date your current earnings reach 80% of your pre -disability earnings; • the date you die; • the date you fail to provide proof of continuing disability; • the date you refuse to participate in an approved rehabilitation program; • when you are able to increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation but you do not do SO. Maximum payment duration means the period of time during which we will send you a monthly payment. Your maximum payment duration is based on your age when you become disabled and appears in the PLAN HIGHLIGHTS. extended own occ disability w/o ADL EE-4L-17.1 48 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHEN WILL OUR PAYMENTS TO YOU STOP? We will stop payments on the earliest of the following dates: • the date you are no longer disabled according to this plan; • the date you reach the end of the maximum payment duration; • the date your current earnings exceed 80% of your pre -disability earnings. If your current earnings fluctuate, we may average your current earnings over a three (3) consecutive month period of time instead of stopping your payment on the date your current earnings reach 80% of your pre -disability earnings; • the date you die; • the date you fail to provide proof of continuing disability; • the date you refuse to participate in an approved rehabilitation program; • when you are able to increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation but you do not do so; • when you have received xx 24 or more months of payments from us, and, you are able to: 1. work in a gainful occupation, part-time or full-time, but you do not do so; 2. increase your current earnings working full-time or part-time in any gainful occupation but you do not do so. Maximum payment duration means the period of time during which we will send you a monthly payment. Your maximum payment duration is based on your age when you become disabled and appears in the PLAN HIGHLIGHTS. limited own occ disability w/o ADL EE-4L-17.2 49 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHEN WILL OUR PAYMENTS TO YOU STOP? We will stop payments on the earliest of the following dates: • the date you are no longer disabled according to this plan; • the date you reach the end of the maximum payment duration; • the date your current earnings exceed 80% of your pre -disability earnings. If your current earnings fluctuate, we may average your current earnings over a three (3) consecutive month period of time instead of stopping your payment on the date your current earnings reach 80% of your pre -disability earnings; • the date you die; • the date you fail to provide proof of continuing disability; • the date you refuse to participate in an approved'rehabilitation program; • when you are able to increase your current earnings by increasing the number of hours you work or the number of duties you perform in your regular occupation, but you do not do so; • after receiving 24 months of payments from us, when you are able to continuously perform all of the ADLs without stand-by help. This does not include an ADL you were not able to perform prior to your effective date of coverage. Maximum payment duration means the period of time during which we will send you a monthly payment. Your maximum payment duration is based on your age when you become disabled and appears in the PLAN HIGHLIGHTS. disability w/ ADL EE-4L-17.3 50 Standard Sample Certificate SAMPLE SECTION 4: LONG TERM DISABILITY BENEFIT SPECIFICS (continued) WHAT HAPPENS IF YOU HAVE A TEMPORARY RECOVERY BUT YOU, BECOME DISABLED AGAIN DUE TO THE SAME INJURY OR SICKNESS AS A PRIOR DISABILITY? If you return to work, earning more than 80% of your pre disability earnings, and the same sickness or injury causes your disability to occur again within six months of the date the -prior , disability ended, we will resume our monthly payments to you if you were continuously insured under the plan for the period of your temporary recovery. You will not need to complete a new elimination period for this disability. Your current period of disability will be subject to the same terms of the plan that applied to your prior period of disability. If you become entitled to payments under any other group long term disability plan (including a plan with the employer that became effective after your disability began), you will pot be eligible for payments under this plan. A disability due to other causes will be treated as a new disability and will be subject to all of the provisions of this plan. EE-4L-18 51 Standard Sample Certificate Conversion: The employee, spouse, and children have the right to convert to an individual whole life policy if the employee ceases employment. This right also applies when coverage under the portability provision terminates. Rates can be obtained from Anthem Life and are based on attained age. Accelerated Death Benefit: A terminally ill employee or spouse can receive up to 50% (maximum of $100,000) of his or her life insurance benefit in a lump sum payment prior to death. Terminal illness is a physician certified medical condition causing a life expectancy of 12 months or less. Rate Guarantee: This proposal reflects rates that are guaranteed for two (2) years from the policy effective date. Waiver of Premium: If, prior to age 60, an insured employee becomes totally disabled for at least nine consecutive months, the premium for the employee and children will be waived until age 65, as long as total disability continues. Spouses of disabled employees can continue coverage under the portability feature, provided they are under age 70. If the employee or spouse elects the portability option, children's coverage may also be continued. LIMITATIONS/ If an employee or employee's spouse dies by suicide within EXCLUSIONS the two year (one year in the State of Colorado) period after the effective date of that insured's coverage, benefits will equal only the amount paid in premiums for that insurance. This exclusion applies whether the death occurs while the employee or spouse is sane or insane. This proposal is a general summary of the program. Final interpretation and complete Listing and description of any and all benefits, limitations and exclusions are found in, and are governed by the Master Contract. No Text SAMPLE SUMMARY OF THE CLAIM INFORMATION SECTION 5 What will you find in this section? • notifying us of a claim giving us proof of claim • filing a claim • information needed in the proof of claim when payments to you begin who we make payments to EE-5-Summary 52 Standard Sample Certificate SAMPLE SECTION 5: CLAIM INFORMATION WHEN DO YOU NOTIFY US OF A CLAIM? You need to notify us in writing of your claim within 30 days prior to the end of the elimination period. If you are not able to notify us within this time, thien you need to notify us as soon as reasonably possible. Notice includes a notice you, give, or which is given on your behalf, to us at our home office, or to an authorized agent of ours. WHEN DO YOU NEED TO GIVE US PROOF OF YOUR CLAIM? Early proof of claim will allow us to make a timely claim decision. You need to send to our home office written proof of your claim within the first 90 days after the elimination period ends. If you are unable to give us proof of your claim within this time, then you must give us proof of your claim within the next 12 months. If you do not have the legal capacity to make responsible decisions concerning yourself, then you may give us proof of,your claim after 'this period. You must notify us immediately when you return to work in any capacity. HOW DO YOU FILE A CLAIM? You can get a claim form from the employer, or you may ask us for a form. If you ask us for a claim form, but you do not receive the form from us within 15 days after asking for it, then you should send written proof of your claim to us without waiting for the form. You and the employer must fill out your claim form. Once you and the employer have completed the claim form, give the claim form to the doctor providing you regular care for your sickness or injury causing disability. The doctor must fill out the physician section of the form. Send the cor{ipleted form to us. WHAT AUTHORITY DO WE HAVE IN DETERMINING YOUR ELIGIBILITY FOR BENEFITS? We have the discretionary authority to determine your eligibility for benefits and to construe the terms of the policy to make a benefits determination. EE-5-1 53 Standard Sample Certificate SAMPLE SECTION 5: CLAIM INFORMATION (continued) WHAT INFORMATION DO YOU NEED TO INCLUDE IN YOUR PROOF OF CLAIM? Your proof of claim must include: that you are under the regular care of a doctor • the date your disability began • the cause of your disability as determined by objective medical tests and examinations acceptable to the medical community • the extent of your disability, including restrictions and limitations which prevent you from performing your regular occupation • the name and address of all hospital(s) or institution(s) where you received treatment, including all doctors who provided regular care • appropriate documentation of your earnings We may request that you send proof of continuing disability indicating that you are under the regular care of a doctor. We must receive this proof within 30 days of the date we ask for it. In some cases, we will require you to give us authorization to obtain additional medical and non- medical information as part of your proof of claim. We may temporarily suspend our payments to you if you do not cooperate, or do not submit the appropriate information. WHEN WILL YOU BEGIN TO RECEIVE PAYMENTS? Once we approve your claim, you will begin to receive payments after you complete the elimination period. We will send you a payment for any period for which we are liable. If the policy or a plan is canceled, the cancellation will not affect a payable claim. WHO DO WE MAKE PAYMENTS TO? We will make all payments to you. WHAT HAPPENS IF WE OVERPAY YOUR CLAIM? We have the right to recover overpayments due to: • fraud; • an error we make in processing your claim; • your receipt of other income amounts. If we determine that we overpaid your claim, then we require you repay us in full. We will determine the method by which you will repay us. We reserve the right to apply our future payments to you toward overpayments. We have the right to recover overpayments from your eligible survivors or estate. We will not recover more money from you than the amount we paid to you. EE-5-2 54 Standard Sample Certificate SAMPLE SUMMARY OF THE ADDITIONS TO YOUR PLAN SECTION 6 What will you find in this section? Other services and additional benefits are explained in this section and may be applicable to your plan. EE-6-Summary 55 Standard Sample Certificate SAMPLE SECTION 6: ADDITIONS TO YOUR PLAN WORKPLACE MODIFICATION BENEFIT If you are disabled and are receiving a payment from us, an additional workplace modification benefit may be payable to the employer for your benefit. We will reimburse the employer for up to 100% of reasonable costs the employer incurs through modifications to the workplace to accommodate your return to work, and to assist you in remaining at work. ' The amount we pay will not exceed the lesser of: • a maximum of $1,000 for any one employee; or • our expected liability for your long term disability claim. To qualify for this reimbursement, you must have: • a disability preventing you from performing some or all of,the material and substantial duties of your regular occupation; • the physical and mental abilities needed to perform some or all of the material and substantial duties of your regular or a gainful occupation, but only with the assistance of the proposed workplace modification; AND • the reasonable expectation of returning to active employment and remaining in active employment with the assistance of the proposed workplace modification. The employer must give us a written proposal on the proposed workplace modification. This proposal must include: • input from the employer, you and your doctor; • the purpose of the proposed workplace modification; • the expected completion date of the workplace modification; • the cost of the workplace modification. We will reimburse the costs of the workplace modification when we: • approve the proposal in writing • receive proof from the employer that the workplace modification is complete • receive proof of the costs incurred by the employer for the workplace modification. At our option, we may pay this amount directly to you, as long as we are given proof that the amount we pay will be used to assist the employer in making reasonable workplace modifications for you. EE-6-1 56 Standard Sample Certificate SAMPLE SECTION 6: ADDITIONS TO YOUR PLAN VOCATIONAL REHABILITATION If you are disabled and receiving a payment from us, you may be eligible for vocational rehabilitation services. These services may include vocational testing and training, job modifications, job placement, or other services we find' reasonably needed to assist you in returning to active employment either full-time or part-time. II I , We will determine the extent to which these services may be provided. We will pay for these services with the service provider(s), unless we agree to other arrangements. Our decision to offer these services will be based on: • your education, training and experience • your transferable skills • your physical and mental abilities • your motivation to return to active employment • the labor force demand for workers in the proposed occupation in your demographic area • our expected liability for your long term disability claim. To qualify for these services, you must: • have a disability which prevents you from performing some or all of the material and substantial duties of your regular occupation • lack the skills, training, or experience you would need to perform another gainful occupation • possess the physical and mental abilities you need to complete a rehabilitation program • be reasonably expected to return to active employment with the assistance of these services. A vocational rehabilitation program proposal may be made by either us, your doctor or yourself. We will prepare a written program with the input of you, your doctor, your current employer and/or your prospective employer. Once we approve a program, you will be provided services according to the written program. EE-6-2(1) 57 Standard Sample Certificate SAMPLE SECTION 6: ADDITIONS TO YOUR PLAN VOCATIONAL REHABILITATION (continued) The written program will describe: • the goals of the program • what our responsibilities are • what your responsibilities are • what responsibilities are of any third party(ies) associated with this program • the expected dates of the services • the expected costs of the services • the expected duration of the program We reserve the right to make the final decision concerning your eligibility to take part in this program, and the amount of any services you will be provided. If you agree to participate in the program, and are unable to complete, without good cause, your responsibilities under the program, then we may reduce or discontinue our payments to you under this plan. Good cause means documented physical or mental impairments, which leave you unable to take part in or complete the agreed upon program. It can also mean that you are involved in: • medical treatment which prevents or interferes with your taking part in or completing the program • some other vocational rehabilitation program which conflicts with your taking part in or completing the program we developed, and is reasonably expected to return you to active employment. EE-6-2(2) 58 Standard Sample Certificate SAMPLE SECTION 6: ADDITIONS TO YOUR PLAN SOCIAL SECURITY ASSISTANCE HOW CAN WE ASSIST YOU WITH OBTAINING SOCIAL SECURITY DISABILITY BENEFITS? If you are receiving a payment from us, we can provide advice to you regarding your claim and assist you with your application for Social Security disability benefits or an appeal. If you receive Social Security benefits this may enable you to receive Medicare after 24 months of disability payments, protect your retirement benefits, and your family may be eligible for Social Security benefits. We can assist you in obtaining Social Security disability benefits by: • helping you find appropriate legal representation or other assistance; AND • obtaining medical and vocational evidence; AND • reimbursing, pre -approved case management expenses. 0 EE-6-3 59 Standard Sample Certificate SAMPLE SECTION 6: ADDITIONS TO YOUR PLAN LUMP SUM SURVIVOR BENEFIT WHAT BENEFITS MAY BE PAYABLE TO YOUR SURVIVOR IF YOU DIE? If we receive proof of your death: • after you have been disabled for at least 180 consecutive days AND • while you were receiving a monthly payment from us we will pay a one-time lump sum benefit to your eligible survivor. This benefit will be equal to 3 times your last gross monthly benefit payment. We will first apply this benefit to any overpayment which may exist on your claim. Gross monthly benefit means the benefit amount before any reductions, for other income benefits and earnings. WHO ARE YOUR ELIGIBLE SURVIVORS? Your spouse, if living, otherwise your children who are under age 25. If you do not have any eligible survivors, payment will be made to your estate. If there is no estate, then no payment will be made. Payments becoming due to your children will be made to: the children OR a person we name to receive payments on behalf of your children. This payment will be valid and effective against all claims by others representing or claiming to represent your children. 3 mon EE-6-4 60 Standard Sample Certificate Section One Executive Summary Section Two Proposal Compliance Letter Section Three Checklist of Items included with Proposal Section Four Plan Design Confirmation Section Five Questionnaire Responses Section Six Performance Guarantees Section Seven Financial Exhibits Section Eight Items Included with Proposal . Proposed Implementation Timeline . 2001 and 2002 Audited Financial Statements . Samples of Standard Reports . Copies of Sample Policies and Certificates - Sample Life and AD&D Policy - Sample Term Life and AD&D Certificate - Sample LTD Policy - Sample LTD Certificate - Sample Hold Harmless Anthem Life What Type of Plans are Available? Employee Only Plan: In this plan the employee chooses the desired amount of coverage (Principal Sum) ranging from $10,000 to $150,000 in $10,000 increments. Family Plan: I I ' An employee can insure a spouse and/or dependent children under the Family Plan. The amount of benefits payable for your spouse and dependent children is based upon the composition of the family at the time'of loss and the employee's selected Principal Sum. The coverage for spouse and children is expressed as a,percentage of the Employee's Principal Sum as follows: Family Plan: 1. At time of loss, the family consists of employee, spouse and dependent children. Percentage of Employee's Principal Sum Employee 100% Spouse 50% Each Child 15% 2. At time of loss, the family consists of employee, spouse, and NO'dependent children. Percentage of Employee's Principal Sum Employee 100% Spouse 60% 3. At time of loss, the family consists of employee, dependent children, but NO spouse. Percentage of Employee's Principal Sum Employee 100% Each child 20% The maximum benefit for any one child is $25,000. Note: An eligible individual may not be covered more than once. If you are covered as an employee, you will not be covered as a spouse or dependent child of another employee. How are Voluntary Accidental Death and Dismemberment Benefits Paid? Voluntary Accidental Death and Dismemberment Insurance pays benefits for accidental loss of life or accidental dismemberment if injuries result in death or dismemberment (member is defined as hand, foot or eye) within one year from the date of accident as follows: Loss oflife.........................................................................Principal Sum Loss of two or more members...........................................Principal Sum Loss of one member..........................................One-Half Principal Sum Loss of thumb and index finger same hand)..One-Fourth Principal Sum Only one amount, the largest entitled, will be paid for all losses resulting from one accident. When Does Coverage Terminate? Spouse coverage terminates at age 70. Benefits are provided to employees beyond age 70 with a reducing benefit SC1784ii;C 3S 7CiloV S: h) 'J]e'f 111 ieQUCC lC G_`�5� of t1iC CI] Ni C:%�CC % SUli': TO',' illE e71lp1oveC betU'eEi. ages 70-74, to 45% of selected Principal Sum for employees between ages 75-79, to 30% for employees between ages 80-84 and to 15% for employees age 85 and over. Sample Hold Harmless AnthenfLife Ov ANTHEM LIFE INSURANCE COMPANY BENEFICIARY DESIGNATION HOLD HARMLESS AGREEMENT Anthem Life Insurance Company ("Anthem Life") agrees to pay group term life insurance benefits under the Anthem Life group policy with City of Fort Collins ("Group") in accordance with the beneficiary designations provided in the enrollment forms of the Group's prior carrier for group term life insurance. The Group agrees to indemnify Anthem Life from any costs and liabilities incurred by Anthem Life as a direct result of Anthem Life paying the benefits in accordance with the beneficiary designations provided in the prior carrier's enrollment forms. Anthem Life agrees to immediately contact the Group in writing if any claim or suit is filed against Anthem Life as a result of Anthem Life paying benefits in accordance with the beneficiary designations provided in the prior carrier's enrollment forms. The Group reserves the right, and Anthem Life specifically agrees, that the Group may retain its own attorneys to defend both the Group and Anthem Life in any action resulting from a beneficiary designation provided in the prior carrier's enrollment forms. If the Group elects to retain counsel in any action resulting from a beneficiary designation provided in the prior carrier's enrollment forms, and Anthem Life elects to retain its own counsel, the Group will not be responsible for any legal fees incurred by Anthem Life. City of Fort Collins By: Title: Date: Anthem Life Insurance Company By: John J. Gainor Title: President and Chief Oaeratina Officer Date: hldhmis.doc What Benefits Does Voluntary Accidental Death and Dismemberment Provide? Voluntary Accidental Death & Dismemberment Group Insurance provides death or dismemberment coverage 24 hours a day. Coverage is in effect on or off the job, while traveling on business or vacation, even at home. Ji Voluntary Accidental Death and Includes These Special Features Dismemberment Also Seat Belt Rider This feature pays an additional 50% of the Principal Sum if an insured person perishes in an automobile accident and there is specific evidence to show the insured was wearing a seatbelt at time of accident. Common Disaster Benefit Rider If the insured has chosen the Employee & Dependent(s) Accidental Death and Dismembermeht option, and if both the employee and spouse die as the result of a common accident, the spouse's loss of life benefit will be increased to 100% of the insured's Principal Sum. Common accident for'this rider means the same accident or separate accidents that occur within the same 24-hour period. Special Education Benefits Rider If the insured, who has chosen the Employee and Dependent(s) Accidental Death and Dismemberment option dies as the result of a covered accident, and is survived by a spouse, the spouse will receive a one-year special education benefit (for eligible expenses up to a maximum of $3,000), when he/she enrolls in an accredited school within one year of the insured's death. Dependent children will also receive a four-year special education benefit for expenses incurred up to 2% of the Principal Sum or $2,500 yearly, whichever is less, if they enroll as full-time students in a school of higher learning before age 25. You Can Choose the Coverage Best Suited for Your Needs You can select coverage (Principal Sum) from $10,000 to $150,000 in $10,000 increments. Who is Eligible? You may apply for insurance under this program if you work a minimum of 20 hours per week and are in one of the following classes eligible for insurance benefits set by the City of Ft. Collins. Eligible classes are: • Classified • Hourly Scheduled • Unclassified Management • Contractual Benefits are paid to the designated beneficiary. Can Employee Dependents Be Covered? Yes, spouses under age 70 are eligible. Dependent children, including step, foster or legally adopted, under 19 years of age (or 25 if a student) and dependent on the employee for support, are also eligible for coverage. How are Premiums Paid? All premiums are paid through convenient payroll deduction. Are There any Limitations or Exclusions? Voluntary Accidental Death & Dismemberment Insurance does not cover loss resulting from: II • Intentionally self-inflicted injuries while sane or insane, • War, declared or undeclared, or any act of war, • Accident occurring while the employee, spouse or child is serving on full-time active duty for more than 30 days in the Armed Forces of any country or international authority, • Sickness, disease, bodily infirmity or any bacterial infection other than bacterial infection occurring in consequence of an accidental cut or wound, or accidental ingestion of a poisonous food substance, • The employee's participation in or commission of, or attempt to commit, an assault or felony, • Travel or flight in any vehicle or device for aerial navigation, including boarding or alighting therefrom: 1. While being used for any test or experimental purpose, or 2. While the employee, spouse or child is operating, learning to operate or serving as a member of the crew thereof, or 3. While being operated by, for, or under the direction of any military authority, other than transport type aircraft operated by the United States Airlift Command (MAC) of the United States of America or any similar transport service of any other country, or 4. Which is owned or leased by, or on behalf of, the employer or any subsidiary or affiliate of such employer, or 5. Which is used for travel or designed for travel, beyond the Earth's atmosphere, or 6. Hang-gliding or parachuting, except in the case where a parachute jump is for self-preservation. Seat belt benefits are not payable if the driver of the automobile is intoxicated, driving while impaired or under the influence of drugs (other than prescribed). Travel Assistance If the insured is traveling 100 miles or more from home, arrangements have been made through American International Assistance Services for the following assistance: • Predeparture Travel Assistance • Travel Medical Emergency Assistance • Medical Evacuation & Repatriation Assistance • Insurance Assistance • Personal Assistance This brochure is a general summary of the program. Final interpretation and complete listing and description of any and all benefits, limitations and exclusions are found in, and are governed by, the Master Contract. Anffiembfe Anthem Life Insurance Company Western Regional Office 700 Broadway, Suite 1117 Denver. CO 80272 303.831-30K 800-873-2258 FORM NO.96102-Ft. Cdhrs (REV.09-01) Anthem Life Insurance Company Additions and Exceptions: The following items are either deviations from the proposal, or are points of clarification, which have not been addressed in the questionnaire: 1) This proposal is subject to underwriting approval. Rates are proposed for an effective date of I/1/2004. Final rates will be based on the actual effective date. Rates are based on a SIC code of 9111. Anthem Life reserves the right to review rates if final census differs by more than 10% and/or continuation provisions desired by City of Fort Collins differ from those included in this proposal. Please do not cancel your coverage until the application is approved in writing. This information is intended to present only a general overview of the benefits. Not all details, limitations and exclusions are included. 2) It is Anthem Life's intent to match the requested benefits. However, Anthem Life's standard policy provisions will apply as our contract is filed and approved in Colorado where the contract will be issued. If there are employees located in other states, Anthem Life will need to comply with any extraterritorial requirements of those states. Some states may require Anthem Life to file its policy language and may ask us to make minor modifications for the residents of that state. The following are deviations from the current plan provisions: LTD - In reference to the LTD Partial Disability formula, Anthem Life does not index earnings. - After 24 months, Anthem Life's LTD plan reduces the Partial benefit by 50% of income earned or received. - The proposed plan includes a 3/12 pre-existing exclusion. - Benefits will not be paid if the disability is due to one of the following: • War, declared or undeclared, or any act of war; • Intentionally self-inflicted injuries; • Active participation in a riot; • Attempt to commit or commission of a felony under federal or state law. - The Anthem Life contract allows for LTD coverage to be continued for Lay -Off or Leave until the end of the month following the month in which the layoff or leave of absence begins. The current plan allows for this coverage to be continued for two months and includes two months for Vacation. LIFE - The spouse termination age under the Anthem Life contract is age 65. The current plan does not indicate a spouse termination age. - Under the Anthem contract, if the death results form suicide, no benefit is payable for any amount of supplemental life insurance purchased within two years prior to the date of suicide. The current plan has a 12 month exclusion. 0�9 Anthem Life Insurance Company Additions and Exceptions, cont.: - The waiver termination age provision applies to both the Basic and Supplemental Life under the Anthem Life contract. The current plan only specifies a waiver termination age for Supplemental Life. - The accelerated death benefit under the Anthem Life contract is 50% to a maximum of $100,000. The current plan's accelerated death benefit is 50% to a maximum of $250,000. - The Anthem Life plan allows for dependent conversion only if the dependent loses coverage as a result of the employee's termination of coverage. The current plan also allows dependent conversion if the dependent loses coverage because they no longer qualify as an eligible dependent. - The Anthem Life plan requires that the AD&D loss must occur within 180 days of the accident. The current plan allows for 365 days. - The Anthem Life plan does not include AD&D losses related to speech and hearing, thumb and index finger, paraplegia, quadriplegia, and hemiplegia, - The Anthem Life contract does include different AD&D exclusions: AD&D benefits are not payable for a loss caused by or connected with suicide or self-inflicted injury committed or inflicted while sane or insane; disease, physical or mental impairment, medical or surgical treatment, diagnostic or preventative care (unless such treatment or care is provided in connection with an accidental injury), or infection (except infection of an accidentally caused wound); taking any drug or chemical unless taken as prescribed by a physician or as directed by the pharmaceutical manufacturer; auto -erotic asphyxiation; taking part in, committing, or attempting to commit an assault or felony; duty as a member of any military, naval, or air organization; taking part in a riot or in any declared or undeclared war; flying in any aircraft as a pilot or crew member; experimental flying or flying for the purpose of training; riding, driving, or testing a vehicle used in a race or speed contest; taking part in the sports of parachute jumping, sky diving, or hang gliding; or operating a motor vehicle while under the influence of alcohol or drugs, as defined by law. 3) Basic Term Life, Basic AD&D and LTD rate(s) are Non -Contributory. A minimum of 100% of eligible employees must participate. A minimum of 30% of eligible employees must participate in Supplemental Life. A minimum of 15% of eligible employees must participate in Voluntary Group Term Life and a minimum of 75% of eligible dependents must participate in Dependent Life. 4) For Life and AD&D coverage, Anthem Life will cover all eligible employees who are actively at work on the day preceding the effective date of coverage. For LTD, Anthem Life will cover all eligible employees who are actively at work on the effective date of coverage. Anthem Life may cover any person not actively at work on the effective date whom otherwise would have been eligible for coverage under a prior carrier's policy. Anyone approved for Waiver of Premium with a prior carrier will remain the responsibility of that carrier. The continued Basic Term Life, Basic AD&D and Supplemental Life coverage is subject to premium payments and will end on the earliest of the following to occur: Antherri Life Anthem Life Insurance Company Additions and Exceptions, cont.: • the date the group policy terminates; • the date the disability ends or the date the employee returns to work; • the date the covered person attains age 70; • the date the covered person retires; • the end of the continuation period. Immediately prior to the effective date of this policy, Anthem Life will require an up-to-date listing of non -actives for determination of liability and rate review. This listing must include: names, dates of birth, benefit amounts, last date worked, and reason for not working. Anthem Life will cover all eligible dependents as of the effective date provided that the dependent was not confined in a health care facility on the day preceding the effective date of coverage. 5) Only full-time, eligible employees working 20 or more hours per week are eligible for coverage. 6) The LTD rate assumes City of Fort Collins participates in a Workers' Compensation Plan. 7) The LTD benefits and rate will not be part of any bargaining agreement. If Union employees are to be included, further rate adjustments may be necessary. 8) Anthem Life currently does not have the following documents indicated on the CHECKLIST: • Provider Report Cards (this would not apply for Life and Disability benefits); • A policy assuring member satisfaction; • A Banking Services Agreement; • Customer Satisfaction Survey. 9) The following are not part of Anthem Life's portfolio of products. Therefore these benefits have not been included in this proposal. *Group Dental *Vision Care •Transplant Coverage *Long Term Care 10) This proposal is offered on a fully insured non -refunding basis. 11) Anthem Life does not permit open enrollment on any lines of coverage. 12) The proposed Basic Term Life, Supplemental Term Life, Dependent Life, Supplemental, Basic AD&D, LTD, Voluntary Group Term Life and Voluntary AD&D rates are guaranteed for two years. 13) This proposal is valid until 12/4/2003. Section 10.0 Questionnaires Questionnaires for each plan appear below. Please respond to each plan for which you,wish to be considered. 10.1 Group Long Term Disability (LTD) The City's fully -insured Group LTD Plan covers classified and non -classified employees who work 20 or more hours per week. Uniformed police and fire employees are not eligible to participate in this plan, but rather have separate coverage. Approximately 1,100 employees are enrolled for LTD coverage. The current volume of coverage is approximately $4,355,200 in monthly earnings. The current carrier has served The City since January 1,1997, and has paid $666,021.44 in total claims. The total disabled life reserve is $1,343,162.00. The City pays 100% of premiums, and participation is mandatory for eligible employees. For approved LTD claims, benefits are paid at 66 2/3% of base monthly salary, to a maximum benefit of $4,500 per month. The plan provides for a 24 month own occupation disability, after which benefits are continued if the claimant cannot work at any job for which he/she is reasonably qualified on the basis of education, training and experience. A copy of the current plan booklet is available upon request. It is expected thbt you will use this booklet to duplicate exactly the current plan provisions. Deviations from current plan design must be clearly stipulated as an addendum to the questionnaire. Please answer completely the following questions. A recent census and a list of benefit recipients are available upon request. Contact the Purchasing Division at (970) 221-6775. QUESTIONNAIRE Group Long Term Disability Please refer to plan booklet for current provisions. 1. Will you agree to cover without limitation all, employees enrolled as of December 31,20032 Anthem Life will cover all eligible employees who are actively at work on the effective'date of coverage. 2. Will you agree to replicate each of the current plan's provisions? If not, please list the specific provisions you will not replicate, along with the reason you elect not to replicate the provision(s). If you do not identify those specific provisions you cannot replicate and you are selected as The City's group LTD vendor, you may be required to make the necessary adjustments in order to achieve replication. Otherwise; your selection may become void. Anthem Life has made every effort to match the current level of benefits as outlined in the request for proposal. However, Anthem Life's standard policy provisions will apply, as our contract is filed in Colorado where the contract will be issued. The following are deviations from the current plan provisions: - In reference to the Partial Disability formula, Anthem Life does not index earnings. - After 24 months, Anthem Life's plan reduces the Partial benefit by 50% of income earned or received. 3. What is your fully insured premium rate for this coverage? Please express your premium rate in terms of cents per $100 of base monthly salary. Premiums must be net of any commissions or broker fees. If you are selected for multiple plans, will you offer discounted premiums? $0.67/$100. If Anthem Life is selected for multiple plans, we will consider offering discounted premiums. 4. Include samples of claim reports, e.g., premiums vs. claims, etc. Sample claim reports are included in Section VIII of this proposal. 5. Is there a toll -free number for employees to call with questions on plan provisions or claim status? What is the average call waiting time? The toll free number is 1-800-813-5682. Representatives are available to answer questions Monday through Friday from 8*30 AM to 5:00 PM Standard Eastern Time. Currently, Anthem does not maintain statistics on the average call waiting time. 6. What is the average length of time an employee waits for an inquiry to be answered fully? The average length of time an employee waits for an inquiry to be answered fully depends on the nature of the request. Most routine questions will receive a response within 24 hours. More complicated issues may require up to five business days. 7. What performance guarantees will you provide? If awarded the contract, Anthem Life will work with the City of Fort Collins to develop mutually agreed upon performance guarantees. 8. Specify clearly any conditions and circumstances that would be excluded from coverage. The proposed plan includes a 3/12 pre-existing exclusion. Benefits will not be paid if the disability is due to one of the following: - War, declared or undeclared, or any act of war, - Intentionally self-inflicted injuries; - Active participation in a riot; - Attempt to commit or commission of a felony under federal or state low. 9.! Please refer to the checklist on page 10 for additional items to submit (e.g., audited financial statements, etc.). The exhibits referenced on the checklist are included in Section VIII of this proposal. Authori ed Anthem Life Signature/Title �I y 6 Date 10.2 Group Life Insurance. AD&D and Supplemental Life The City's fully insured Group Life/AD&D/Supplemental Life Insurance Plan covers classified and non -classified employees who work 20 or more hours per week. Uniformed police and fire employees are eligible to participate in this plan. Basic coverage is mandatory for each eligible employee, and is 100% paid by The City. No retiree life insurance is available, except through individual conversion. Waiver of premium is required. Eligible employees may elect basic coverage in the amounts of $10,000 or one -times annual base salary. Basic AD&D coverage is equal to the basic life amount. Employees may also elect additional life and AD&D coverage in amounts of one -,two -,or three -times base annual salary. ' Spousal coverage is available in $25,000 increments up to $100,000. Dependent child coverage is available in amounts of $5,000 or $10,000. 1 The guaranteed Basic Maximum Benefit is $100,000. The guaranteed issue amount.for Basic and Optional Life is $125,000. The combined maximum benefit is $500,000. Benefits reduce by 30% at age 65; 50% at age a70; 70% at age 75; and 80% at age 80. A recent census and a listing showing coverage volumes are available upon request. Contact the Purchasing Division at (970) 221-6775. The following table indicates the coverage amounts in effect and the number of enrolled persons: Plan Coverage #Enrolled Volume ($) Employee Life $10,000 149 1,490,000 1-x salary 1,305 66,777,227 Employee AD&D $10,000 149 1,490,000 1-x salary 1,305 66,777,227 Add'I Ix 178 9,425-543 Add'l2x 82 8,265,225 Add'l3x 107 15.091.410 Optional Employee 1-x salary 242 12,603,726 Life 2-x salary 113 11,197,150 3-x salary 128 18,059,185 Up to $125,000 1 19,000 Up to $125,000 1 30,000 Optional Spousal $10,000 * 145 1,450,000 Life $25,000 73 1,800,000 $50,000 64 3,200,000 $75,000 20 1,500,000 $100,000 16 1,600,000 • This level of coverage no longer available to new electors; however, this level of coverage must be continued for those who are already enrolled. City of Fort Collins Request ; Proposal Life and Disability Insurance Program EXECUTIVE SUMMARY Overview Anthem Life Insurance Company (Anthem Life) is submitting this proposal to provide employee benefits and administration services for the life and disability insurance programs of City of Fort Collins. This document provides a summary and overview of the plan proposed. Anthem Life is a specialist in group life insurance and disability income products. We do not offer health care products or services. Our specialization enables us to totally focus on protecting and improving the financial security of the many customers we serve. Our goal is to provide an exceptional customer experience by delivering high -quality products and expert services designed to meet the specific needs of the groups and group members we protect. Anthem Life provides insurance products and services to over 37,000 groups, covering approximately 830,000 employees, with over $27 billion of life insurance benefits in force. Anthem Life's sales during 2002 exceeded $20 million of annualized premiums. Anthem Life would be honored to extend our services to the City of Fort Collins, its employees, and their families. A Strong Family Anthem Life is a wholly owned subsidiary of Anthem, Inc. ("Anthem"), an Indianapolis - based insurance company. As the Blue Cross and Blue Shield licensee in nine states, Anthem provides health care benefits to more than 11 million people. Anthem is ranked 146 on the Fortune 500 and 381 on Fortune's Global 500, with over $13 billion in annual revenue and over $5 billion in surplus. Anthem does business in Virginia as Anthem Blue Cross and Blue Shield. It became the Blue Cross and Blue Shield licensee in Virginia following its 2002 merger with Trigon, a strong, respected Virginia company. The insurance and financial industries' most respected rating agencies continue to recognize Anthem's financial strength. Anthem has earned ratings of "A2" from Moody's, "A" from Standard and Poor's, and "AA-" from Fitch (formerly Duff and Phelps). Anthem Life has earned an "A" (Excellent) rating from A.M. Best Company, the oldest and most recognized insurance rating organization. This rating reflects a company's financial strength and ability to meet its contractual obligations. Anthems Life 69 QUESTIONNAIRE Group Life Insurance, ADM and Supplemental Life Please refer to plan booklet for current plan provisions. 1. Do you agree to cover without limitation all employees/dependents enrolled as of December 31, 20037 Anthem Life will cover all eligible employees who are actively at work on the day preceding the effective date of coverage. Anthem Life may cover any person not actively at work on the effective date whom otherwise would have been eligible for coverage under a prior carrier's polity. Anyone approved for Waiver of Premium with a prior carrier will remain the responsibility of that carrier. The continued Basic Term Life, Basic AD&D, Supplemental Term Life and Supplemental AMD coverage is subject to premium payments and will end on the earliest of the following to occur: • the date the group policy terminates; • the date the disability ends or the date the employee returns to work; • the date the covered person attains age 70; • the date the covered person retires; • the end of the continuation period. Immediately prior to the effective date of this policy, Anthem Life will require an up- to-date listing of non -actives for determination of liability and rate review. This listing must include: names, dates of birth, benefit amounts, last date worked, and reason for not working. Anthem Life will cover all eligible dependents as of the effective date provided that the dependent was not confined in a health care facility on the day preceding the effective date of coverage. 2. Will you agree to replicate each of the current plan's provisions? If not, please list the specific provisions you will not replicate, along with the reason you elect not to replicate the provision(s). If you do not identify those specific provisions you cannot replicate and you are selected as The City's group life vendor, you may be required to make the necessary adjustments in order to achieve replication. Otherwise, your selection may become void. Anthem Life has made every effort to match the current level of benefits as outlined in the request for proposal. However, Anthem Life's standard policy provisions will apply, as our contract is filed in Colorado where the contract will be issued. The following are deviations from the current plan provisions: The spouse termination age under the Anthem Life contract is age 65. The current plan does not indicate a spouse termination age. Under the Anthem contract, if the death results form suicide, no benefit is payable for any amount of supplemental life insurance purchased within two years prior to the date of suicide. The current plan has a 12 month exclusion. The waiver termination age provision applies to both the Basic and Supplemental Life under the Anthem Life contract. The current plan only specifies a waiver termination age for Supplemental Life. ' , I I , ' The accelerated death benefit under the Anthem Life contract, is 50% to a maximum of $100,000. The current plan's accelerated death benefit is 50% to a maximum of $250,000. The Anthem Life plan allows for dependent conversion only if the, dependent loses coverage as a result of the employee's termination of coverage. The current plan also allows dependent conversion if the dependent loses coverage because they no longer qualify as an eligible dependent, ' The Anthem Life plan requires that the AD&p loss must occur within 180 days of the accident. The current plan allows for 365 days. The Anthem Life plan does not include AD&D losses related to speech and hearing, thumb and index finger, paraplegia, quadriplegia, and hemiplegia, The Anthem Life contract does include different AD&D exclusions: AD&D benefits are not payable for a loss caused by or connected with suicide or self-inflicted injury committed or inflicted while sane or insane; disease, physical or mental impairment, medical or surgical treatment, diagnostic or preventative care (unless such treatment or care is provided in connection with an accidental injury), or infection (except infection of an accidentally caused wound); taking any drug or chemical unless'taken as prescribed by a physician, or as directed by the pharmaceutical manufacturer; auto -erotic asphyxiation; taking part in, committing, or attempting to commit an assault or felony; duty as a member of any military, naval, or air organization; taking part in a riot or in any declared or undeclared war; flying in any aircraft as a pilot or crew member; experimental flying or flying for the purpose of training; riding, driving, or testing a vehicle used in a race or speed contest; taking part in the sports of parachute jumping, sky diving, or hang gliding; or operating a motor vehicle while under the influence of alcohol or drugs, as defined by law. 3. What is your fully insured premium rate for this coverage? Please express your premium quote in terms of cents per covered $1,000 of base annual salary. Premiums must be net of any commissions or broker fees. If you are selected for multiple plans, will you offer discounted premiums? $0.16/$1,000 Life $0.03/$1,000 AD&D If Anthem Life is selected for multiple plans, we will consider offering discounted premiums. 4. Include samples of claim payment reports, e.g., premiums vs. claims, etc. Sample claim reports are included in Section VIII of this proposal. 5. Is there a toll -free telephone number for employees to call with questions on plan provisions or claim status? The toll free number is 1-800-813-5682. Representatives are available to answer questions Monday through Friday from 8:30 AM to 5:00 PM Standard Eastern Time. Currently, Anthem does not maintain statistics on the average call waiting time. 6. What is the average length of time required to resolve fully an employee inquiry? The average length of time an employee waits for an inquiry to be answered fully depends on the nature of the request. Most routine questions will receive a response within 24 hours. More complicated issues may require up to five business days. 7. What performance guarantees will you provide? If awarded the contract, Anthem Life will work with the City of Fort Collins to develop mutually agreed upon performance guarantees. 8. Specify any situations that would result in a claim denial. For covered members, there are no plan exclusions for Basic Term'Life. For Supplemental Life, if the death results form suicide, no benefit is payable for any amount of supplemental life insurance purchased within two years prior to the date of suicide. For Accidental Death and Dismemberment (AbAD) coverage, death or covered loss must occur within 180 days of an accident. In addition, no benefits are payable for a loss caused by or connected with suicide or self-inflicted injury committed or inflicted while sane or insane; disease, physical or mental impairment, medical or surgical treatment, diagnostic or preventative care (unless such treatment or care is provided in connection with an accidental injury), or infection (except infection of an accidentally caused wound); taking any drug or chemical unless taken as prescribed by a physician or as directed by the pharmaceutical manufacturer; auto -erotic asphyxiation; taking part in, committing, or attempting to commit an assault or felony; duty as a member of any military, naval, or air organization; taking part in a riot or in any declared or undeclared war; flying in any aircraft as a pilot or crew member; experimental flying or flying for the purpose of training; riding, driving, or testing a vehicle used in a race or speed contest; taking part in the sports of parachute jumping, sky diving, or hang gliding; or operating a motor vehicle while under the influence of alcohol or drugs, as defined by law. 9. Please refer to the checklist on page 10 for additional items to submit (e.g., audited financial statements, etc.). The exhibits referenced on the checklist are included in Section VIII of this proposal. authorize Anthem Life Signature/Title Date 10.3 Group Voluntary Life In addition to basic and supplemental life insurance, employees may elect additional voluntary lift insurance coverage. This coverage is fully -insured and 100% employee paid. Applications are subject to medical evidence. Smoker and non-smoker rates are in effect. A copy of the current plan booklet is available upon request for specific plan provisions. Coverage is available in $10,000 increments up to $300,000. Benefits must be portable. The following coverage amounts are in effect. Voluntary Life;- Employee: $67,240,000 Voluntary Life'- Spousal: 28,500,000 Voluntary Life - Children: 1,000,075 Voluntary AMD (Employee and Dependents) 13,000,060 u QUESTIONNAIRE Group Voluntary Life Please refer to plan booklet for current plan provisions. 1. Do you agree to cover without limitation all employees/dependents enrolled on December 31,2003? As the incumbent carrier for the Group Voluntary Life benefit, this would not apply. 2. Will you agree to replicate each of the current plans provisions? If not, please list the specific provisions you will not replicate, along with the reason you elect not to replicate the provision(s). If you do not identify those specific provisions you cannot replicate and you are selected as The City's voluntary life vendor, you may be required to make the necessary adjustments in order to achieve replication. Otherwise, your selection may become void. As the incumbent carrier for Voluntary Group Life, Anthem Life agree§ to continue the plan provisions that are currently in place. 3. What is your fully insured premium rate for this coverage? Please express your premium quote in terms of cents per covered $1,000 of base annual salary. Premiums must be net of any commissions or broker fees. If you are selected for multiple plans, will you offer discounted premiums? Monthly Premium Rates Per $10,000 of Coverage A6E BANDS NON -TOBACCO TOBACCO* Less than 35 $0.40 $0.60 35-39 $0.50 $0.90 40-44 $0.80 $1.40 45-49 $1.30 $2.50 50-54 $2.00 $4.00 55-59 $3.80 $7.00 60-64 $4.90 $ 8.60 65-69 $8.30 $14.00 70-74** $14.50 $ 22.00 75-79 $29.80 $40.70 If Anthem Life is selected for multiple plans, we will consider offering discounted premiums. 4. Include samples of claim payment reports, e.g., premiums vs. claims, etc. I I I I i Sample claim reports are included in Section VIII of this proposal. 5. Will you provide a toll free telephone number that employees can use to ask questions about claims or plan provisions? The toll free number is 1-800-813-5682. Representatives are available to answer questions Monday through Friday from 8:30 AM to 5:00 PM Standard Eastern Time. Currently, Anthem does not maintain statistics on the average call waiting time. I 6. Please refer to the checklist on page 10 for additional items to submit (e.g., audited financial statements, etc.). The exhibits referenced on the checklist are included in Section VIII of this proposal. u 6o�horizecl Athem Life Signature/Title Date P "gem Life Insurance Company ox 182361 Columbus, OH 43218-2361 Tel 800 551-7265 Fax 614-433-8869 Performance Guarantees Anthem Life does not have standard corporate performance guarantees. If Anthem Life is awarded the contract, we will work with the City of Fort Collins to develop mutually agreed upon performance guarantees. 1801 Watermark Drive • Suite 200 9 Columbus 9 OH • 43215-7088 City of Fort Collins Financial Exhibit Proposed Effective Date: l/l/2004 Proposal Date: 9/3/2003 Proposed Basic Term Life and Basic AD&D Rates Coverage Monthly Rate No. of Insured Volume Monthly Costs Annual Costs Basic Term Life $0.16 (Per $1,000 1,429 67,672,000 $10,827.52 $129,930.24 Basic AD&D $0.03 (Per $1,000 1,429 67,672,000 $2,030.16 $24,361.92 $12,857.68 $154,292.16 Proposed Dependent Life Child Rates Coverage Rate Per Unit $5,000 Child $0.50 $10,000 Child $1.00 Proposed E T Lr- ._--1 T Life S ouse Rates W lu GG 0 1G111G11L[ll 1 Gl 1LL L11G Al1U "V G11UG11L Age Categories Employee Supplemental Term Life Monthly Step Rates per $1,000 Dependent Life Spouse Monthly Step Rates per $1,000 < 30 $0.10 $0.10 30-34 $0.12 $0.12 35-39 $0.15 $0.15 40-44 $0.25 $0.25 4549 $0.42 $0.42 50-54 1 $0.65 $0.65 55-59 $01.02 $01.02 60-64 $1.45 $1.45 65-69 $2.00 $2.00 70-74 $3.18 Benefit Terminates at age 65 75-79 $4.79 Benefit Terminates at age 65 80 + $8.71 Benefit Terminates at a e 65 Proposed Employee Supplemental AD&D Rate: $0.03/$1,000 AntherilLife 09 City of Fort Collins Financial Exhibit Proposed Effective Date: l/l/2004 Proposal Date: 9/3/2003 PrODosed LTD Rate — Ontinn 1 Monthly Rate Coverage g Per $100 of Covered No. of Insured Monthly Covered Monthly Cost Annual Cost Payroll Payroll LTD 1 $0.67 1 1,056 $4,281,876 $28,688.57 $344,262.84 PrODOsed LTD Rate — Ontinn 7 Monthly Rate Coverage g Per $100 of Covered No. of Insured Monthly Covered Monthly Cost Annual Cost Payroll Payroll LTD $0.51 1,056 $4,303,266 $21,946.66 $263,359.92 Voluntary Group Term Life Monthly Premium Rates Per $10,000 of Coverage With Waiver of Premium AGE BANDS NON -TOBACCO TOBACCO* Less than 35 $0.40 $0.60 35-39 $0.50 $0.90 40-44 $0.80 $1.40 45-49 $1.30 $2.50 50-54 $2.00 $4.00 55-59 $3.80 $7.00 60-64 $4.90 $8.60 65-69 $8.30 $14.00 70-74** $14.50 $22.00 75-79 $29.80 $40.70 -Tobacco is defined as using tobacco and/or nicotine in any form in the last 12 months. "Spouse coverage terminates at 70. if employee is age 85 and older, contact ANTHEM LIFE for rates. Children are insured at the flat rate of $ 1.50 per month for $5,000, This flat rate covers all eligible children. It is not a per child fee. Anthew Life 09 City of Fort Collins Financial Exhibit Proposed Effective Date: 1/1/2004 Proposal Date: 9/3/2003 Voluntary Accidental Death and DicmP.mhPrmPn* Ratac Benefit Amount Employee Only Plan Family M Plan $10,000 $0.43 $0.57 $20,000 $0.86 $1.14 $30,000 $1.29 $1.71 $40,000 $1.72 $2.28 $50,000 $2.15 $2.85 $60,000 $2.58 $3.42 $70,000 $3.01 $3.99 $80,000 $3.44 $4.56 $90,000 $3.87 $5.13 $100,000 $4.30 $5.70 $110,000 $4.73 $6.27 $120,000 $5.16 $6.84 $130,000 $5.59 $7.41 $140,000 $6.02 $7.98 $150,000 $6.45 $8.55 AnthenlLife 09 City of Fort Collins Request _ Proposal Life and Disability Insurance Program National experience, local service Anthem Life serves a wide variety of customers. Its accounts range from very small companies to groups with thousands of members across many states. The industries served cover the spectrum of commercial businesses, associations, and public sector groups. We are admitted as a life and health insurance company in 47 states and the District of Columbia. Anthem Life is licensed in all states except New York, Rhode Island, and Vermont. Anthem Life's main office is located at 1801 Watermark Drive in Columbus, Ohio. That office manages all aspects of Anthem Life's business, and is the operations center for all functions except service performed at the Western regional office for accounts headquartered in the West. Anthem Life's life and disability coverage and Anthem's health coverage are sold through local sales offices throughout Anthem's regions. Sales and sales support services for the City of Fort Collins account will be provided by Anthem's local office. All other services for US Inspect's life insurance programs will be performed at Anthem Life's main office, in Columbus. Anthem Life will perform all services for the life insurance programs itself. No subcontractors will be involved. Expert Service for Large Accounts Anthem Life has considerable experience meeting the needs of groups of all sizes. One of our oldest accounts is a very large public sector group in California. We currently insure over 15,765 members for that account. Anthem Life presently has ten accounts with 5,000 or more employees, and numerous accounts with between 1,000 and 5,000 employees. Description of Services and Staffing Implementation Anthem Life will assign a team of highly experienced associates to facilitate the account implementation process and establish smooth, efficient services tailored to meet the City of Fort Collins' specific administrative and informational needs. Anthem Life 69. September 4, 2003 James B. O'Neill II, CPPO, FNIGP The City's Purchasing Division 215 North Mason Street, 2°d Floor Fort Collins, Colorado 80524 RE: Proposed Implementation Timeline for the City of Fort Collins Dear Mr. O'Neill II, Anthem Life Insurance Company Sox 182361 Columbus, OH 43218-2361 Tel 800 551-7265 Fax 614-433-8869 Anthem Life :.:, V An Anthem Life Implementation Coordinator will serve as a central contact point for all implementation activities associated with the installation of the City of Fort Collins insurance plan. Once all new business requirements are satisfied, the group policy and certificates will be published and distributed to the employer within thirty (30) working days. Once the case is installed, Anthem Life will assign an Administrative Service Team to the City of Fort Collins account. The select group of associates will be responsible for ongoing administration and other customer service activities associated with the account. Please direct all inquiries about this proposal to Keith Slaughter at (614) 433-8341, or by email at Keith.Slaughterna anthem com, or at the address shown in our letterhead, Gary Redabaugh Senior Account Executive at (303) 831-3230 or Eden Ripingill Specialty Sales Executive at (303) 831-2493. As a specialist in life and disability products, Anthem Life's total focus is on these product lines. We pride ourselves on meeting a diversity of customer needs. Anthem Life appreciates the opportunity to respond to this RFP and looks forward to working with The City of Fort Collins to meet and exceed its benefits administration needs. Sincerely, Keith Slaughter Underwriter Analyst Cc: Gary Redabaugh Eden Ripingill 1801 Watermark Drive • Suite 200 • Columbus • OH • 43215-7088 P" V. ERNST & YOUNG LLP FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION —STATUTORY -BASIS Anthem Life Insurance Company Years ended December 31, 2002 and 2001 with Reports of Independent Auditors No Text Anthem Life Insurance Company Financial Statements and Other Financial Information —Statutory -Basis Years ended December 31, 2002 and 2001 Contents Report of Independent Auditors...............................................................................................1 Audited Financial Statements —Statutory -Basis Balance Sheets—Statutory-Basis...............................................................................................3 Statements of Income—Statutory-Basis.................................................................................... 4 Statements of Changes in Capital and Surplus —Statutory -Basis .............................................. 5 Statements of Cash Flows—Statutory-Basis............................................................................. 6 Notes to Financial Statements—Statutory-Basis....................................................................... 7 Other Financial Information —Statutory -Basis Supplemental Schedule of Selected Financial Data —Statutory -Basis .................................... 23 Investment Risks Interrogatories—Statutory-Basis.................................................................25 Summary Investment Schedule—Statutory-Basis................................................................... 26 Note to Supplemental Schedule of Selected Financial Data —Statutory -Basis ....................... 27 No Text MERNST & YOUNG 1 Ernst & Young uP • Phone: (614) 224-5678 1100 Huntington Center Fax: (614) 222-3939 41 South High Street www.ey.com Columbus, Ohio 43215 Report of Independent Auditors Board of Directors Anthem Life Insurance Company We have audited the accompanying statutory -basis balance sheets of Anthem Life Insurance Company as of December 31, 2002 and 2001, and the related statutory -basis statements of income and capital and surplus and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the Indiana Department of Insurance, which practices differ from accounting principles generally accepted in the United States. The variances between such practices and accounting principles generally accepted in the United States and the effects on the accompanying financial statements are described in Note 1. In our opinion, because of the effects of the matter described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States, the financial position of Anthem Life Insurance Company at December 31, 2002 and 2001, or the results of its operations or its cash flows for the years then ended. However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Anthem Life Insurance Company at December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting practices prescribed or permitted by the Indiana Department of Insurance. As discussed in Note 2 to the financial statements, in 2001 the Company changed various accounting policies to be in accordance with the revised National Association of Insurance Commissioners Accounting Practices and Procedures Manual, as adopted by the Indiana Department of Insurance. A Member Practice of Ernst & Young Global 1 No Text Our audits were conducted for the purpose of forming an opinion on the statutory -basis financial statements taken as a whole. The accompanying supplemental investment disclosure is presented to comply with the National Association of Insurance Commissioners' Annual Statement Instructions and the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual and is not a required part of the statutory -basis financial statements. Such information has been subjected to auditing procedures applied in our audit of the statutory -basis financial statements and, in our opinion, is fairly stated in all material respects in relation to the statutory -basis financial statements taken as a whole. f 7 UP January 27, 2003 N City of Fort Collins Request . Proposal Life and Disability Insurance Program Our implementation team will meet with City of Fort Collins' representatives to exchange information and establish an implementation workplan, schedule, and key contacts. Our objective will be to convert eligible employees to the Anthem Life program with as little disruption as possible to City of Fort Collins's employees and benefits administration areas. Customer service Anthem Life's service philosophy is based on personalized service to each account. A In Force Coordinator is assigned to serve as the primary contact person for each account's benefits staff. That coordinator will provide the administrative services requested, or will direct City of Fort Collins' benefits staff to the appropriate Anthem Life associate. Claims A highly experienced team of claim examiners will handle life and disability claims for the City of Fort Collins. Each Anthem Life claim examiner is dedicated to either life claims or disability claims. Anthem Life's Claims department has various levels of examiners. Team Leaders have ten or more years of claims experience and typically have one or more professional designations such as Associate Life and Health Claims (ALHC) or Fellow Life Management Institute (FLMI). A Claims Examiner II has at least two years of claims experience and may also have a professional designation. Associates in Claims Examiner I or Claims Trainee positions range from zero to two years of experience. All levels of examiners have completed extensive internal training. The lower level examiners are assigned a Team Leader who audits all claims over authorized draft authority limits. Anthem Life's Claims Manager, Barbara Ley, has over 25 years of experience in the insurance industry and holds the designations of FLMI, FLHC, and ACS. Anthem Life's team Anthem Life is well prepared to support City of Fort Collins account. Adding this account will not require the addition of any new service representatives or claim examiners to Anthem Life's staff. The Anthem Life associates who will be assigned to serve this account, if awarded to Anthem Life, are highly experienced with accounts and programs similar to this one. Anthem Life ou Anthem Life Insurance Company Balance Sheets - Statutory -Basis December 31 2002 2001 (In Thousands) Admitted assets Cash and invested assets: Bonds $ 223,300 $ 218,807 Policy loans and other 325 469 Cash and short-term investments 7,076 5,084 Total cash and invested assets 230,701 224,360 Recoverable from reinsurers 685 671 Data processing equipment and software 633 140 Federal income tax recoverable (including $1,310 and $5,474 net deferred tax assets at December 31, 2002 and 2001, respectively) 5,618 5,773 Deferred and uncollected premiums, net of reinsurance payable 3,134 3,770 Accrued investment income 1,982 2,577 Receivable from affiliates 659 851 Other admitted assets 1,418 1,308 Total $ 2449830 $ 239,450 Liabilities and capital and surplus Liabilities: Liabilities for future policyholder benefits $ 136,565 $ 131,202 Policy and contract claim liabilities 16,571 17,279 Experience rating refunds 8,005 10,675 Federal income taxes payable 180 181 General and operating expenses 7,069 6,935 Interest maintenance reserve 2,430 1,823 Asset valuation reserve 629 771 Payable to affiliates 6,860 1,798 Other liabilities 2,260 2,324 Total liabilities 180,569 172,988 Capital and surplus: Common stock, $1 par value: Authorized - 5,452,599 shares Issued and outstanding - 3,267,547 shares 3,268 3,268 Additional paid -in capital 60,993 65,943 Unassigned deficit - (2,749) Total capital and surplus 64,261 66,462 Total liabilities and capital and surplus $ 2449830 $ 239,450 See accompanying notes. 3 Anthem Life Insurance Company Statements of Income - Statutory -Basis Revenue: Premiums Net investment income Other Total revenue Benefits and expenses: Policyholder benefits and claims Operating expenses Commissions, taxes and fees Total benefits and expenses Income before federal income taxes and net realized capital gains Federal income taxes Income before net realized capital gains Net realized capital gains (net of taxes of $503 and $406 in 2002 and 2001, respectively, and transfers to the interest maintenance reserve of $935 and $811 in 2002 and 2001, respectively) Net income See accompanying notes. Year ended December 31 2002 2001 (In Thousands) $ 97,459 $ 92,853 12,914 14,980 1,998 3,990 112,371 111,823 66,038 64,165 19,851 15,233 12,487 13,318 98,376 92,716 13,995 19,107 1,688 6,337 12,307 12,770 $ 12,307 $ 12,770 4 Anthem Life Insurance Company Statements of Changes in Capital and Surplus - Statutory -Basis (In Thousands) Balance as of December 31, 2000 Cumulative effect of changes in accounting principles Net income Change in net deferred income taxes Change in nonadmitted assets Dividends to stockholder Change in asset valuaton reserve Balance as of December 31, 2001 Net income Change in net deferred income taxes Change in nonadmitted assets Dividends to stockholder Change in asset valuation reserve Balance as of December 31, 2002 See accompanying notes. Total Additional Capital Common Paid -in Unassigned and Stock Surplus Surplus Surplus $ 3,268 $ 65,943 $ (4,115) $ 65,096 - 5,626 5,626 3,268 65,943 1,511 70,722 - - 12,770 12,770 - - 14 14 - - (1,981) (1,981) - - (15,000) (15,000) - - (63) (63) 3,268 65,943 (2,749) 66,462 - - 12,307 12,307 - - (4,290) (4,290) - - (360) (360) (4,950) (5,050) (10,000) - - 142 142 $ 3,268 $ 60,993 $ - $ 64,261 5 Anthem Life Insurance Company Statements of Cash Flows - Statutory -Basis Operating activities: Premiums collected, net of reinsurance Net investment income collected Commission and expense allowances on reinsurance ceded Other income received Policyholder claims and benefits paid Commissions, other expenses, and taxes paid Federal income taxes paid Net (increase) decrease in policy loans Net cash provided by operating activities Investment activities: Proceeds from investments sold, matured or repaid Cost of investments acquired Net cash provided by (used in) investment activities Financing activities: Dividends paid Other Net cash used in financing activities Year ended December 31 2002 2001 (In Thousands) $ 969145 $ 87,633 149255 15,028 19014 2,397 714 858 (679910) (71,688) (329230) (26,992) (59697) (6,064) 142 (28) 69433 1,144 2319517 194,248 (2359855) (182,734) (49338) 11,514 (1%000) (15,000) 99897 788 (103) (14,212) Net increase (decrease) in cash and short-term investments 19992 (1,554) Cash and short-term investments at beginning of year 59084 6,638 Cash and short-term investments at end of year $ 79076 $ 5,084 See accompanying notes. R, Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (Dollars In Thousands) December 31, 2002 1. Nature of Operations and Significant Accounting Policies Organization Anthem Life Insurance Company of Indiana changed its name to Anthem Life Insurance Company ("the Company") is a life and health insurance company domiciled in the state of Indiana. The Company's common stock consists of $2,500 owned by Anthem Midwest, Inc., a wholly owned subsidiary of Anthem Insurance Companies, Inc. ("Anthem Insurance'), and $768 owned by Rocky Mountain Hospital and Medical Services, Inc. ("RNEHMS"), an indirect wholly owned subsidiary of Anthem Insurance. Anthem Insurance and its subsidiaries form a diversified network of insurance and financial services — companies operating throughout the United States. Products include health and life insurance products, managed health care, and government program administration. Basis of Presentation The accompanying financial statements have been prepared in accordance with the National Association of Insurance Commissioners ("NAIC") Accounting Practices and Procedures Manual and in conformity with accounting practices prescribed or permitted by the Indiana Department of Insurance (the "Department"). Such practices vary from accounting principles generally accepted in the United States ("GAAP"). The more significant variances from GAAP are as follows: Investments: Investments in bonds are reported at amortized cost or market value based on their " NAIC rating; for GAAP, such fixed maturity investments were designated at purchase as available - for -sale and are reported at fair value with unrealized holding gains and losses reported as a separate component of surplus. Market values of certain investments in bonds and stocks are based on values - specified by the NAIC rather than on actual or estimated market values. Investments in subsidiaries are not consolidated with the accounts and operations of the Company as would be required for GAAP. Investments in subsidiaries are valued pursuant to the NAIC rules. Non -admitted assets: Certain assets designated as "non -admitted", including agents' balances, deferred federal income taxes in excess of certain statutory limits, furniture and equipment, prepaid expenses and certain premium receivable balances are excluded from the balance sheets by a direct charge to policyholders' surplus. Software costs: Expenditures for software are capitalized and amortized over the useful life with the net balance non -admitted. 7 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 1. Nature of Operations and Significant Accounting Policies (continued) Basis of Presentation (continued) Valuation Reserves: Under a formula prescribed by the NAIC, the Company defers the portion of realized capital gains and losses on sales of fixed income investments, principally bonds, attributable to changes in the general level of interest rates and amortizes those deferrals over the remaining period to maturity of the individual security sold. That net deferral is reported as the "interest maintenance reserve" ("WR") in the accompanying balance sheets. Realized capital gains and losses are reported in income net of federal income tax and transfers to the DAR. Under GAAP, realized capital gains and losses would be reported in the income statement on a pretax basis in the period that the assets giving rise to the gains or losses are sold. The "asset valuation reserve" ("AVR") provides a valuation allowance for invested assets. The AVR is determined by an NAIC prescribed formula with changes reflected directly in unassigned surplus; AVR is not recognized for GAAP. Benefit Reserves: Certain policy reserves are calculated based on statutorily required interest and mortality assumptions rather than on estimated expected experience or actual account balances as would be required under GAAP. Deferred Income Taxes: Deferred tax assets are limited to 1) the amount of federal income taxes paid in prior years that can be recovered through loss carrybacks for existing temporary differences that reverse by the end of the subsequent calendar year, plus 2) the lesser of the remaining gross deferred tax assets expected to be realized within one year of the balance sheet date or 10% of capital and surplus excluding any net deferred tax assets, EDP equipment and operating software and any net positive goodwill, plus 3) the amount of remaining gross deferred tax assets that can be offset against existing gross deferred tax liabilities. The remaining deferred tax assets are non -admitted. Deferred taxes do not include amounts for state taxes. Under GAAP, states taxes are included in the computation of deferred taxes, a deferred tax asset is recorded for the amount of gross deferred tax assets expected to be realized in future years, and a valuation allowance is established for deferred tax assets not realizable. Statements of Cash Flows: Cash and short-term investments in the statements of cash flows represent cash balances and investments with initial maturities of one year or less. For GAAP, the corresponding captions of cash and cash equivalents include cash balances and investments with initial maturities of three months or less. E Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 1. Nature of Operations and Significant Accounting Policies (continued) Basis of Presentation (continued) A reconciliation of net income and capital and surplus as determined in accordance with statutory accounting practices to amounts determined in accordance with GAAP is as follows: Statutory -basis amounts Investments Investments in subsidiaries Deferred taxes Goodwill and intangibles Pension and postretirement benefits Policyholder benefits Other Nonadmitted assets GAAP-basis amounts Net Income Capital and Surplus Year ended December 31 December 31 2002 2001 2002 2001 $ 12,307 $ 12,770 $ 64,261 $ 66,462 (2,202) 717 10,916 5,702 3 5 179 177 (4,046) 32 (3,528) (2,042) (629) (805) 7,571 8,200 1,106 (52) - (1,106) 4,389 (767) 1,916 (635) (385) 606 (385) 606 $ 10,543 $ 12,506 $ 83,329 $ 79,809 Other significant accounting policies are as follows: Use of Estimates Preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Investments Bonds not backed by loans are stated at amortized cost, with amortization calculated based on the modified scientific method, using lower of yield to call or yield to maturity. Pre -payment assumptions for mortgaged -backed securities and structured securities were obtained from broker - dealer survey values. These assumptions are consistent with the current interest rate and economic environment. The retrospective adjustment method is used to value all mortgage -backed securities. Short-term investments include investments with maturities of less than one year at the date of acquisition and are reported at amortized cost. Cash equivalents are short-term highly liquid investments with original maturities of three months or less and are stated at amortized cost. 0 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 1. Nature of Operations and Significant Accounting Policies (continued) Investments (continued) Unrealized gains and losses on common stocks are reflected directly in capital and surplus unless there is deemed to be an other than temporary decline in value, in which case the loss is charged to income. Realized gains and losses on sales of investments are determined using the specific -identification basis and are included in income, net of federal income tax and transfers to the MIR. The AVR serves to provide a reserve, recorded through surplus, against fluctuations in the market value of bonds, stocks and other invested assets. The 1MR defers the recognition of realized capital gains and losses sold on fixed income investments where the gains or losses resulted from changes in interest rates. Amounts deferred are amortized into investment income over the approximate remaining life of the investments sold, as if the Company had held the investment to maturity. Policy loans are reported at unpaid balances. Data Processing Equipment and Software Data processing equipment is recorded at cost less accumulated depreciation. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. Accumulated depreciation at December 31, 2002 and 2001 was $732 and $467, respectively. Furniture and Equipment Furniture and equipment is capitalized and depreciated on a straight-line basis over its useful life. The cost, less accumulated depreciation of $214 and $1,308 at December 31, 2002 and 2001, respectively, is charged to unassigned surplus as a non -admitted asset. Furniture and equipment is depreciated on a straight-line basis over its useful life. Depreciation expense in 2002 and 2001 was $20 and $66, respectively. Reserves for Losses and Loss Adjustment Expenses The liability for policyholder claims and benefits payable represents management's best estimate of the liability for all claims reported and unreported through December 31. The claim liabilities are estimated using case -basis evaluations and statistical analyses. Although these estimates are subject to considerable variability due to the effects of trends in claims severity and frequency, management believes the liabilities for unpaid claims are adequate. The estimates are continually reviewed and adjusted as experience develops or new information becomes known, and any necessary adjustments are included in current operations. 10 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) ^ (Dollars In Thousands) 1. Nature of Operations and Significant Accounting Policies (continued) Reserves for Losses and Loss Adjustment Expenses (continued) The Company waives deduction of deferred fractional premiums on the death of life and annuity policy insureds and returns any premium beyond the date of death. Surrender values on policies do not exceed the corresponding benefit reserves. Extra premiums are charged for substandard lives. Reserves are calculated explicitly using appropriate substandard mortality. The Company has no ._ insurance in force on which the gross premiums are less than the net premiums. Tabular interest, tabular less actual reserves released, and tabular cost have been determined by _ formula. Tabular interest on funds not involving life contingencies is calculated as the credited rate of interest times the mean of the amount of funds subject to such credited rate of interest held at the - beginning and end of the year of valuation. Premiums Group life and health insurance premiums are earned on a pro rata basis over the terms of the policies. Individual life premiums and annuity considerations are recognized as revenue when due. Premiums are earned over the term of the related insurance policies and reinsurance contracts. Unearned premium reserves are established to cover the unexpired portion of premiums written and are computed by pro rata methods for direct business and are based on reports received from ceding companies for reinsurance. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred. The premium paid by policyholders prior to the effective date is recorded in the balance sheet as advance - premiums and subsequently credited to income as earned during the coverage period. Premium rates for certain lines of business are subject to approval by the Department. The Company estimates accrued retrospective premium adjustments for its group life and accident and health insurance business through a mathematical approach using an algorithm of the Company's underwriting rules and experience rating practices. The amount of net premiums written by the Company at that are subject to retrospective rating features was $11, 800 at December 31, 2002. 11 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 1. Nature of Operations and Significant Accounting Policies (continued) Uninsured Accident and Health Plans Premium equivalents and claims expense for uninsured accident and health plans have been excluded from the Company's statutory -basis statements of operations. Premium equivalents for uninsured accident and health plans totaled $3,093 and $2,604 in 2002 and 2001, respectively. Net reimbursement for uninsured accident and health plans, along with reimbursement for other services arrangements, totaled $6 and $44 in 2002 and 2001, respectively. Reinsurance Reinsurance premiums, losses and loss adjustment expenses are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Federal Income Taxes The Company's federal income tax return is a separate filing. The Company's ultimate parent files a consolidated federal return but has not elected to include life insurance companies in that return. Thus, no tax sharing agreement is in place for federal income taxes. Reclassifications Certain prior year amounts have been reclassified to conform to current year presentation, and certain amounts have been classified differently than as reported in the Annual Statement. 2. Statutory Accounting Practices Effective January 1, 2001, the State of Indiana required insurance companies domiciled in Indiana to prepare their statutory -basis financial statements in accordance with the NAIC Accounting Practices and Procedures Manual subject to any deviations prescribed or permitted by the Indiana Department of Insurance. 12 City of Fort Collins Request . Proposal Life and Disability Insurance Program Scope of Services Anthem Life is offering this proposal with respect to the life and disability insurance programs for the City of Fort Collins. Anthem Life is proposing to provide and administer all of the plans described in the RFP (basic life insurance, supplemental life insurance voluntary group term life insurance, dependent life insurance and long term disability insurance). We have included a proposal for both the current program and the proposed programs, identified in the RFP. Pricing Proposal Our responses to the RFP provide the details of Anthem Life's pricing proposal for the City of Fort Collins. AnthelriLife ev Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) .. (Dollars In Thousands) 2. Statutory Accounting Practices (continued) The cumulative effect of accounting changes adopted to conform to the provisions of the NAIC Accounting Practices and Procedures manual effective January 1, 2001 was $5,626 and is reported as ~N a decrease to 2001 unassigned deficit. Included in the total adjustment was an increase in unassigned -- deficit of $80 related to guaranty funds and other assessments, a decrease in unassigned funds of $5,573 related to deferred tax assets, and a decrease in unassigned deficit of $133 related to fixed assets. The cumulative effect is the difference between the amount of capital and surplus at the beginning of the year and the amount of capital and surplus that would have been reported at that date if the new accounting principles had been applied retroactively for all periods. 3. Investments + A summary of investments at December 31 is as follows: 2002 .: Cost or Gross Gross NAIC Amortized Unrealized Unrealized Market Cost Gains Losses Value Bonds: U.S. Government securities $ 419563 $ 951 $ - $ 429514 Industrial and miscellaneous 879861 19904 345 899420 Mortgage -backed securities 93,876 - - 93,876 $ 2239300 $ 29855 $ 345 $ 225,810 2001 Cost or Gross Gross NAIC Amortized Unrealized Unrealized Market Cost Gains Losses Value Bonds: U.S. Government securities $ 11,706 $ 164 $ (195) $ 11,675 States and political subdivisions 1,995 - (47) 1,948 Industrial and miscellaneous 112,267 1,817 (391) 113,693 Mortgage -backed securities 92,839 - - 92,839 $ 2189807 $ 1,981 $ (633) $ 220,155 13 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 3. Investments (continued) The amortized cost and market value of bonds at December 31, 2002, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Due in one year or less Due after one through five years Due after five through ten years Due after ten years Mortgage backed Cost or NAIC Amortized Market Cost Value $ 10,822 $ 10,861 469767 47,337 50,033 51,709 21,802 229027 93,876 93,876 $ 2239300 $ 225,810 Fair values of publicly traded bonds are generally based on independently quoted market prices, which may differ from NAIC market values. The fair values of bonds were $231,157 and $221,915, at December 31, 2002 and 2001, respectively. Proceeds from sales of bonds during 2002 and 2001 were $232,019 and $192,515, respectively, resulting in realized gross gains of $5,649 and $2,921 and realized gross losses of $4,211 and $1,673, respectively. Bonds with an amortized cost of approximately $3,455 and $3,461 were on deposit with various regulatory authorities at December 31, 2002 and 2001, respectively. 4. Reinsurance The Company is routinely involved in reinsurance transactions with other companies. The primary purpose of ceded reinsurance is to protect the Company from potential losses in excess of what it is prepared to accept. Reinsurance may be on an individual policy basis or for a defined group of policies. Ceded reinsurance is treated as the liability of the company that accepted the risk; however, if the reinsurer could not meet its obligations, the Company would remain liable. All companies to which the Company has ceded reinsurance have been rated "Excellent" or better by the A.M. Best Company, an independent insurance rating company. 14 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 4. Reinsurance (continued) Premiums ceded were $28,016 and $32,405 for 2002 and 2001, respectively. Ceded benefits were $24,049 and $27,871 for 2002 and 2001, respectively. Policy reserves and liabilities were reduced by $64,667 and $64,424 at December 31, 2002 and 2001, respectively, for ceded reinsurance. Ceded unearned premium reserves were $602 and $1,586 at December 31, 2002 and 2001, respectively. Almost all of the Company's individual life insurance, with the exception of some conversion policies, has been ceded to Protective Life Insurance Company ("Protective Life"). Reserves of $25,774 and $26,584 were ceded to Protective Life at December 31, 2002 and 2001, respectively. 5. Federal Income Taxes The Company filed a federal income tax return as a single entity for 2002 and 2001. Prior to 1984, a portion of the Company's income was not taxed, but was accumulated in a "policyholders' surplus account" which at December 31, 2002 amounted to approximately $23,000. In the event that those amounts are distributed to its shareholder, the excess amounts would become taxable at current rates. Management does not anticipate any transactions that would cause federal income taxes to become payable on any portion of this amount. The components of deferred tax assets (liabilities) at December 31 are as follows: Gross deferred tax assets Gross deferred tax liabilities Net deferred tax asset Deferred tax asset nonadmitted Net admitted deferred tax asset (Increase) decrease in.nonadmitted asset 2002 2001 $ 49859 $ 8,451 (11516) (818) 3,343 7,633 (29033) (2,159) $ 1,310 $ 5,474 $ 126 $ (113) The company has an unrecognized deferred tax liability of $945 related to policyholders' surplus of stock life insurance companies that arose in fiscal years beginning on or before December 15, 1992. Current income taxes incurred consist of the following major components: Federal income tax on operations Federal income tax on net capital gains Federal income taxes incurred 2002 2001 $ 19688 $ 6,337 503 437 $ 2,191 $ 6,774 15 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 5. Federal Income Taxes (continued) The Company's income tax expense and change in deferred taxes differs from the amount obtained by applying the federal statutory rate of 35% for the year ended December 31 for the following reasons: 2002 2001 Tax expense computed using statutory rate $ 5,402 $ 7,124 Other deductions 1,080 (378) Total incurred tax $ 69482 $ 6,746 The components of deferred income taxes at December 31 are as follows: 2002 2001 Deferred tax assets: Discounting of unpaid losses $ 231 $ 45 Accrued future expenses 723 917 Tax proxy DAC 2,188 2,145 Tax vs. SAP reserves 597 4,376 Depreciation and nonadmitted fixed assets 841 512 Other 279 456 Total deferred tax assets 49859 8,451 Nonadmitted deferred tax assets (29033) (2,159) Admitted deferred tax assets 29826 6,292 Deferred tax liabilities: Deferred and uncollected premiums 261 597 Accelerated deductions 632 - Deferred market discount on bonds 100 93 Depreciation - 44 Internally developed software 522 62 Other 1 22 Total deferred tax liabilities Net admitted deferred tax asset 1,516 818 $ 12310 $ 5,474 16 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 5. Federal Income Taxes (continued) The changes in deferred tax assets and deferred tax liabilities are as follows: 2002 2001 Change — Total deferred tax assets $ 4,859 $ 8,451 $ (3,592) Total deferred tax liabilities 1,516 818 698 Net deferred tax asset $ 39343 $ 7,633 $ (4,290) Federal income taxes incurred in the current and preceding years which are available for recoupment in the event of future losses is $6.0 million and $3.3 million from 2002 and 2001, respectively. ._ 6. Capital and Surplus - The Company is limited in the amount of dividends that can be declared without regulatory approval. The State of Indiana Insurance Commissioner must approve any dividend that, together with all dividends declared during the proceed twelve months, exceeds the greater of statutory net income for the prior calendar year or 10% of statutory surplus existing at the end of the prior calendar year. Also, any dividend paid from other than earned surplus shall be considered an extraordinary dividend, and will need approval of the Insurance Commissioner. The Company paid dividends of $10,000 and $15,000 to Anthem Insurance in 2002 and 2001, respectively. A portion of the 2002 dividend, $5,050, was recorded as a reduction of unassigned surplus. The remaining portion, $4,950, was treated as a return of additional paid -in surplus. This treatment complies with the Department's position that a dividend should not cause an unassigned deficit. The State of Indiana has adopted Risk -Based Capital ("RBC") requirements as specified by the NAIC. Under those requirements, the amount of surplus to be maintained is determined based on the — various risk factors. The Company's capital and surplus exceeds the NAIC's RBC requirements at December 31, 2002. 7. Related Party Transactions Investment advisory services and other administrative services are provided based on cost allocation agreements with Anthem Insurance and affiliated companies. The Company incurred net expenses of $11,778 and $10,746 during 2002 and 2001, respectively for these services. - Of the reinsurance amounts shown in Note 4, $1,582 and $372 of the policy reserves, $681 and $349 of premiums, and $681 and $0 of benefits were ceded to Anthem Insurance in 2002 and 2001, respectively. 17 w Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 7. Related Party Transactions (continued) The Company has an agreement to provide various group life and disability insurance coverages to employees of Anthem Insurance and its subsidiaries. The agreement provides for Anthem Insurance to reimburse the Company for the actual cost incurred for certain of these coverages. Such reimbursements totaled $3,902 and $4,591 for 2002 and 2001, respectively. Life and disability reserves at December 31, 2002 and 2001 included $6,676 and $6,410 respectively, pursuant to this agreement. Additional premiums were received from Anthem Insurance of $790 in 2002 and $757 in 2001 relating to coverages underwritten by the Company. The Company pays Anthem Insurance a monthly fee per employee to fund pension and other post retirement benefits. The Company paid $234 and $108 in 2002 and 2001, respectively, related to these employee benefits. The Company maintains balances in a short-term pooled investment with Anthem Insurance and other affiliates. The balance of the pooled investment included in cash was $3,413 and $3,381 at December 31, 2002 and 2001, respectively. Interest is received monthly on these funds at a rate equal to Anthem Insurance's monthly short-term investment portfolio rate of return. Interest totaling $126 and $55 was received on this investment in 2002 and 2001, respectively. 8. Leases The Company leases office equipment under various noncancelable operating leases that expire through December, 2006. Rental expense for these leases for 2002 and 2001 was $37 and $49, respectively. In July, 2001, the Company entered into a noncancelable operating lease agreement for its main administrative office in Columbus, Ohio, which expires on December 31, 2005. The term of the lease may be extended under certain conditions at the Company's option for two additional consecutively occurring five-year periods. The agreement provides for minimum rental payments plus additional amounts that vary with the lessor's costs. Rental expense for this office space for 2002 was $383. At December 31, 2002, the minimum aggregate rental commitments are as follows for the five succeeding years: 2003 2004 2005 2006 2007 Total $ 523 523 524 $ 1,570 M Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) —' 8. Leases (continued) In December, 1996 the Company entered into an annually renewable lease agreement for office space for its main administrative office in Columbus, Ohio with its affiliate, Community Insurance Company. The lease was terminated by the Company in 2001 as the Company relocated its main administration -- office to Columbus, Ohio. Rental expenses incurred for the lease of this office space was $368 in 2001. The Company rents office space for its regional operations in Denver, Colorado, under an annually renewable lease agreement with its affiliate, R1vIAMS. Rental expenses incurred for this office space was $160 in 2002 and $198 in 2001. 9. Policy and Contract Claim Liabilities The following table provides a reconciliation of the beginning and ending balances of policy and contract claims, net of reinsurance recoverables: Year ended December 31 2002 2001 Policy and contract claims, at beginning of year $ 17,279 $ 24,148 Add provision for claims, net of reinsurance, occurring in: — Current year 67,311 61,262 Prior years (541) 2,908 Net incurred losses during the current year 66,770 64,170 Deduct payments for claims, net of reinsurance, occurring in: Current year 549606 49,630 Prior years 12,872 21,409 Net claim payments during the current year 67,478 71,039 Policy and contract claims, at end of year $ 16,571 $ 17,279 — The Company's reserves for unpaid claims increased (decreased) in 2002 and 2001 for claims that were incurred in prior years. The increases (decreases) resulted principally from settling claims established in prior years for amounts that were higher (lower) than expected. — 19 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 10. Premium and Annuity Considerations Deferred and Uncollected Deferred and uncollected life insurance premiums and annuity considerations at December 31, 2002, were as follows: Ordinary new business Ordinary renewal Group Life Total 11. Annuity Reserves Gross Net of Loading $ 27 $ 27 151 148 2,412 2,412 $ 2,590 $ 2,587 At December 31, 2002, the Company's annuity reserves and deposit fund liabilities that are subject to discretionary withdrawal (with adjustment), subject to discretionary withdrawal (without adjustment), and not subject to discretionary withdrawal provisions are summarized as follows: Subject to discretionary withdrawal: At book value without adjustment (with minimal or no charge or adjustment) Not subject to discretionary withdrawal Total annuity reserves and deposit fund liabilities before reinsurance Less reinsurance ceded Net annuity reserves and deposit fund liabilities Amount Percent $ 26,012 89.3 % 3,120 10.7 29,132 100.0 % 6,380 $ 22,752 20 Anthem Life Insurance Company Notes to Financial Statements -Statutory -Basis (continued) (Dollars In Thousands) 12. Uninsured Accident and Health Plans The gain from operations from ASO uninsured plans and the uninsured portion of partially insured plans was as follows during 2002: ASO Uninsured Plans ... Net reimbursement for administrative expenses (including administrative fees) in excess of actual expenses $ 6,184 Total net other income or expenses (including interest paid to or received from plans) _ Net gain from operations $ 6,184 Total claim payment volume $ 3,092,750 13. Contingencies The Company is involved in pending and threatened litigation of the character incidental to the business transacted, arising out of its insurance and investment operations and is from time to time involved as a party in various governmental and administrative proceedings. The Company believes _ that any liability that may result from any one of these actions is unlikely to have a material adverse effect on its financial position or results of operations. 21 Other Financial Information September 4, 2003 James B. O'Neill II, CPPO, FNIGP The City's Purchasing Division 215 North Mason Street, 2na Floor Fort Collins, Colorado 80524 RE: Proposal Compliance Dear Mr. O'Neill II, "iem Life Insurance Company Sox 182361 Columbus, OH 43218-2361 Tel 800 551-7265 Fax 614-433-8869 Anthem Life •••rt. 91 1 Anthem Life Insurance Company (Anthem Life) is pleased to submit this Proposal Compliance Letter signifying our intent to comply with the RFP specifications, except as specifically noted in the Additions and Exceptions document located in Section IV of this proposal. Also, please note that the sample policies and certificates provided in Section VIII are for illustrative purposes only and may not be reflective of the benefit plan designs requested by the group. As a specialist in life and disability products, Anthem Life's total focus is on these product lines. We pride ourselves on meeting a diversity of customer needs. Anthem Life appreciates the opportunity to respond to this RFP and looks forward to working with The City of Fort Collins to meet and exceed its benefits administration needs. If you have any questions regarding this proposal, please contact either Keith Slaughter, Underwriting Analyst at (614) 433-8341; or Gary Redabaugh, Senior Account Executive at (303) 831-3230; or Eden Ripingill Specialty Sales Executive at (303) 831-2493. Sincerely, John J. Gainor, President 1801 Watermark Drive • Suite 200 • Columbus 9 OH • 43215-7088 No Text Anthem Life Insurance Company Supplemental Schedule of Selected Financial Data — Statutory -Basis (In Thousands) December 31, 2002 Investment income earned: Government bonds $ 2,223 Other bonds (unaffiliated) 10,644 Contract loans 19 Cash / short-term investments 261 Aggregate write-ins for investment income 48 Gross investment income $ 13.195 Bonds and short-term investments by class and maturity: Bonds by maturity —statement value: Due within one year or less $ 36,341 Over 1 year through 5 years 79,719 Over 5 years through 10 years 71,731 Over 10 years through 20 years 18,539 Over 20 years 21,521 Total by maturity Bonds by class —statement value: Class 1 $ 208,450 Class 2 19,401 $ 227.851 Total bonds publicly traded $ 217.306 Total bonds privately placed $ 10.545 Short-term investments —book value $ 4.551 Cash on deposit Life insurance in -force: Ordinary $ 14.730 Group life $ 25.114 275 Amount of accidental death insurance in force under ordinary policies $ 42.928 23 Anthem Life Insurance Company Supplemental Schedule of Selected Financial Data — Statutory -Basis (continued) (In Thousands) December 31, 2002 Life insurance policies with disability provisions in force: Ordinary i Group life 703 Supplementary contracts in -force: Ordinary —not involving life contingencies: Amount on deposit 1 8 Income payable $ 118 Ordinary —involving life contingencies: Income payable $ 3 Annuities: Group: Amount of income payable $ 51 Accident and health insurance —Premiums in force: Ordinary $ 13 Group $ 35.096 Claim payments 2002: Group Accident and Health: 2002 $ 10.460 2001 2,791 2000 $ 159 1999 $ 13 1998 $ (17) Prior $ �) Other Accident and Health: 2002 $ 299 2001 $ 101 2000 $ 76 1999 $ 50 1998 $ 25 Prior 30 24 Anthem Life Insurance Company Investment Risks Interrogatories — Statutory -Basis (In Thousands) December 31, 2002 1. The Company's total admitted assets as reported on page two of its Annual Statement is $244,830. 2. Following are the 10 largest exposures to a single issuer/borrower/investment, by investment category, excluding: (i) U.S. government, U.S. government agency securities and those U.S. government money market funds listed in the Appendix to the SVO Practices and Procedures Manual as exempt, and (ii) policy loans: Investment Category Bonds: 2.01 Apache Corp. 2.02 Saxon Asset Securities Trust 2.03 Heinz Co. 2.04 First Union - Lehman Brothers 2.05 WFS Financial Owner Trust 2.06 Deutsche Bank Financial 2.07 Commercial Mortgage Asset Trust 2.08 Marriott Vacation Club Owner 2.09 Americredit Auto Receivables 2.10 Unilever Capital Corporation Percentage of Total Admitted Amount Assets $4,217 1.722% 3,500 1.430% 3,458 1.412% 3,435 1.403% 3,145 1.284% 3,143 1.284% 2,637 1.077% 2,568 1.049% 2,500 1.021% 2,386 0.975% 3. The Company's total admitted assets held in bonds, by NAIC rating, are: NAIC Rating 3.01 NAIC-1 3.02 NAIC-2 Total Percentage of Total Admitted Amount Assets $208,450 85.141% 19,401 7.924% $227,851 93.065% 25 Anthem Life Insurance Company Summary Investment Schedule — Statutory -Basis (In Thousands) December 31, 2002 Admitted Assets as Reported Gross Investment Holdings* in the Annual Statement Percentage Percentage of Total of Total _Investment Cateeories Amount Invested Assets Amount Invested Assets - Bonds: U.S. Treasury $ 41,562 18.0% $ 41,562 18.0% Securities issued by states, territories, and possessions and their political subdivisions in the U.S.: Revenue and assessment obligations 1,995 0.9 1,995 0.9 Mortgage -backed securities (includes -' residential and commercial MBS): Pass -through securities: Guaranteed by GNMA 17,362 7.5 17,362 7.5 Issued by FNMA and FHLMC 28,274 12.2 28,274 12.3 CMOs and REMICs: Issued by FNMA and FHLMC 23,936 10.4 23,936 10.4 Privately issued and collateralized by MBS issued or guaranteed by GNMA, FMNA, or FHLMC 967 0.4 967 0.4 All other privately issued 23,337 10.1 23,337 _ 10.1 Other debt and other fixed income securities (excluding short term):, Unaffiliated domestic securities (includes credit tenant loans rated by the SVO) 85,866 37.2 85,866 37.2 Equity interests: Other equity securities: — Affiliated 180 0.1 0 0.0 Policy loans 318 0.1 318 0.1 Receivables for securities 8 0.0 8 0.0 Cash and short-term investments 7,076 3.1 7,076 3.1 Total invested assets $230_RR 1 1 on no/ e114n 17m , nn not *Gross investment holdings as valued in compliance with NAIC Accounting Practices and Procedures Manual 26 �- Anthem Life Insurance Company Note to Supplemental Schedule of Selected Financial Data — Statutory -Basis (In Thousands) December 31, 2002 Note -Basis of Presentation The accompanying schedules and interrogatories presents selected statutorybasis financial data as of December 31, 2002 and for the year then ended for purposes of complying with paragraph 9 of the Annual Audited Financial Reports in the General section of the National Association of Insurance Commissioners' ("NAIC") Annual Statement Instructions and the NAIC's Accounting Practices and Procedures Manual and agrees to or is included in the amounts reported in the Company's 2002 Statutory Annual Statement as filed with the Indiana Department of Insurance. Captions that represent amounts that are not applicable to the Company have been omitted. 27 No Text Sample Summary of Costs and Experience Anthem Life v Summary of Costs and Experience For ABC Company (Sample) Basic Term Life, AD&D, Supplemental Life, Supplemental AD&D, Long Term Disability, Voluntary Group Term Life, and Voluntary AD&D Rates: Basic Tenn Life - - $0 Supplemental Life - - $0 AD&D - - $0 Supplemental AD&D - - $0 Long Term Disability - - $0 Voluntary Group - - $0 Tenn Life Experience Period of September 1, 2001 through June 30, 2002: x $0 m IV.a"I 'fib al..ry $0 $0 Basic Tenn Life Supplemental Life $0 $0 $0 AD&D $0 $0 $0 Supplemental AD&D $0 $0 $0 Long Term Disability $0 $0 $0 Voluntary Group Term $0 $0 $0 Life Confidential Page 1 09/04/2003 Sample Paid Claims Report Life Benefits Anthem Life 9 CHECKLIST OF ITEMS INCLUDED WITH PROPOSAL Yes No Description of Item x Proposal for Group Life Insurance, AD&D and Supplemental Life _x Proposal for Group Voluntary Life x Proposal for Voluntary Group Life and AD&D x Proposal for Group Long Term Disability _ x Proposal for Group Dental x Proposal for Vision Care x Proposal for Transplant Coverage x Proposal for Long Term Care Signed Proposal Compliance Letter x Signed Plan Design Confirmation x Completed and Signed Questionnaire(s) x Dental Network Access Analysis (if applicable) x Vision Network Access Analysis (if applicable) x Copy of your EOB for Dental and/or Vision Services (if applicable) x Proposed Implementation Timeline for The City. x Audited Financial Statements and/or Department of Insurance filings for the past two years (Only if requested by The City) x Provider "Report Cards" used to provide feedback on clinical and non -clinical performance measures x Copy of your Policy Assuring Member Satisfaction _ Samples of all Standard and Optional Reports you are proposing to provide on an account specific basis x Copy of your Banking Services Agreement x Copy of your Customer Satisfaction Survey Copy of your Administrative Services Agreement or Insurance Contract that will be in effect January 1, 2004 Signature 9fAuthorized Reresentative: C ` ; City of Fort Collins, RFP 2003 SAMPLE PAW CLAIMS REPORT LIFE BENEFITS ANTHEM LIFE INSURANCE COMPANY LIFE CLAIMS LIFE CLAIMS PAID GROUP NUMBER: 12345 DIVISION: 000 GROUP NAME: Si LC AIM# NAME DATE DTH DATE RP T DATE PD CHECK# LEE 123458824 LCO0123456 DOE, JANE 04/15/02 04/15/02 04/16/02 0900079119 32500.00 CLAIM NO LCO0123456 TOTAL: 32500.00 123456824 LCO0456123 DOE, JANE 05/10/02 07/01/02 07/02/02 ACCESS ADV 18750.00 123458824 LCO0456123 DOE, JANE 05/10/02 07/01/02 07/02/02 ACCESS ADV 18760.00 • CLAIM NO LCO0123456 TOTAL: 37500.00 • CLAIMANT 123458824 TOTAL: 70D00.00 444488254 LCO0123456 DOE, THOMAS 06/10/02 06/17/02 06/18/02 0900082563 89000.00 444488254 LC00123456 DOE, THOMAS 06/10/02 06/17/02 06/18/02 0900082563 • CLAIM NO LCO0123456 TOTAL: 89000.00 • CLAIMANT 444488254 TOTAL: 89000.00 555546872 LCO0456123 DOE, PHILLIP 04/12/02 04/20/02 04/20/02 ACCESS ADV 28000.00 555546872 LCO0456123 DOE, PHILLIP 04/12/02 04/20/02 04/20/02 ACCESS ADV • CLAIM NO LCO0456123 TOTAL: 28000.00 • CLAIMANT 555546872 TOTAL: 28000.00 666668875 LCO0789456 DOE, JANE 02/27/02 04/03/02 04/05/02 ACCESS ADV • CLAIM NO LCO0789456 TOTAL: 0.00 • CLAIMANT 666668875 TOTAL: 0.00 - 999999872 LCO0456987 DOE, MARK JR 01/21/02 04/02/02 04/02/02 ACCESSAOV 33000.00 • CLAIM NO LCO0456987 TOTAL: 33000.00 • CLAIMANT 999999872 TOTAL: 33000.00 111157894 LCO0123879 DOE, LYDIA 01/22/02 04/20/02 04/22/02 ACCESS ADV 12000.00 111157894 LCO0123879 DOE, LYDIA 01/22/02 04/20/02 04/22/02 ACCESS ADV ` CLAIM NO LCO0123879 TOTAL: 12000.00 • CLAIMANT 111157694 TOTAL: 12000.00 777775463 LCO0654236 DOE, KAN 02/04/02 04/15/02 04/16/02 ACCESS ADV 30000.00 777775463 LCO0654236 DOE, KAN 02/04/02 04/15/02 04/15/02 ACCESS ADV • CLAIM NO LCO0654236 TOTAL: 30000.00 • CLAIMANT 777776463 TOTAL: 30000.00 PAGE #1 SOME COMPANY, INC. REPORTING DATES: 04/01/02 THRU 06/30/02 AD-D SUPP-WFE SUPP AD-D DEP LIFE DEP AD-D INTEREST ADJUSTMENTS TOTAL FU 32500.00 F 00 0.00 0.00 0.00 0.00 0.00 0.00 32500.00 18750.00 F 18750.00 F 00 0.00 0.00 0.00 0.00 0.00 0.00 37500.00 00 0.00 0.00 0.00 0.00 0.00 0.00 70000.00 89000.00 F 359000.00 359000.00 F 00 359000.00 0.00 0.00 0.00 0.00 0.00 448000.00 00 359000.00 0.00 0.00 0.00 0.00 0.00 448000.00 833.67 28833.67 F 28000.00 833.67 28833.67 F 00 28000.00 0.00 0.00 0.00 _ 1667.34 0.00 57667.34 00 28000.00 0.00 0.00 0.00 1667.34 0.00 57667.34 50000.00 287.67 50287.67 F DO 0.00 0.00 50000.00 0.00 287.67 0.00 - 50287.67 DO 0.00 0.00 50000.00 _ 0.00 287.67 0.00 50287.67 33000.00 F DO 0.00 0.00 0.00 0.00 0.00 0.00 33000.00 DO 0.00 0.00 0.00 0.00 0.00 0.00 33000.00 12000.00 F 12000.00 - 12000.00 F DO 12000.00 0.00 0.00 0.00 0.00 0.00 24000.00 - 30 12000.00 0.00 - 0.00 0.00 0.00 0.00 24000.00 353.84 - - 30363.84 F 61 ODO.00 - - 719.47 _ - -61719.47 F DD 61000.00 0.00 0.00 0.00 -1073.31 0.00 92073.31 )0 61000.00 0.00 _ 0.00 0.00 1073.31 0.00 92073.31 Sample Paid Claims Report Long Term Disability Benefit Anthem Life v SAMPLE PAID CLAIMS REPORT LONG TERM DISABILITY BENEFIT ANTHEM LIFE INSURANCE COMPANY PAGE M 1 DISABILITY CLAIMS LONG TERM DISABILITY CLAIMS PAID GROUP NUMBER: 12345 OMSION: 000 GROUP NAME: SOME COMPANY, INC. REPORTING DATES: 04/012002 THRU 05r=2002 �SL1 CLAIM p NAME PATE INC 26IE-RPI DATE PD CHECK NO GROSS PM T MCR TAX SS TAX FED TA% STATE TAX LOCALTAX NET PM T OPN RESERVE fljQ MCR TAXABLE SS TAXABLE FED TAX' 123458824 LCO012345 DOE. JANE 04/15/02 04/1 SM2 04/16/02 0900081972 1096.33 15.90 67.97 1012.46 N 1090.33 1096.33 1095.33 • CLAIM NO LCO0123456 TOTAL: 1096.33 15.90 67.97 0.00 0.00 0.00 1012.46 1096.33 1096.33 • CLAIMANT 123458824 TOTAL: 1096.33 15.90 67.97 0.00 0.00 0.00 1012A6 1096.33 1098.33 GROSS PMT MCR TAX SS TAX FED TAX FED TAX STATE TAX LOCAL TAX NET FIAT MCR TAXABLE SS TAXABLE FED TAXASL ' DIVISION: 000 TOTAL 1098.33 15.90 67.97 0.00 0.00 0.00 FIX) 1012.46 1098.33 1096.33 1096.33 GROSS FIAT MCR TAX MCR TAXABLE SS TAXABLE FED TAXABLE - 1096.33 1096.33 1096.33 SS TAX FED TAX STATE TAX LOCAL TAX NET PMT TOTAL LTD GROUP 12345 _ 1096.33 15.90 67.97 0.00 0.00 0.00 1012.48 _ Sample Experience Analysis — LTD Anthenf Life ov SAMPLE. .Experience Maly is LTX11 Experience Experience Experience Experience Period Period Period Period 11/1/1999- 11/1/00 - 11/1/01— 11/1/02 - 10/31/00 10/31/01 10/31/02 5/31/03 Total Paid Claims 116,284 80,904 32,105 IBNR 229,293 Reserves 203,266 48,183 26,585 278,034 Time Value (42,993) (9,833) (3,133) (55,959) Adjustment Incurred Claims 276,557 119,254 55,557 451,368 .onstant Premium 262,572 316,621 361,441 940,634 Loss Ratio 105 % 38 % 15 % 48 % L SAMPLE Experience Analysis - LTD Experience Period Incurred Claims Constant Premium Incurred Loss Ratio Tolerable Loss Ratio Inforce Rate Experience Rate Credibility Manual Rate Case Rate 11/1/1999 — 10/31/02 451,368 940,634 .48 .75 1.07 (composite) .68 .55 1.00 .82 Sample Open Claims AnthenlLife ov SAMPLE Open Claims Claimant# 1 Age 37 Disabil"Date 6/5/1998*** Net Benefit 947 Reserve 119,294 Occu ation Customer Service 2 51 2/4/1999*** 1,097 92,322 Lineman 3 56 7/13/1999*** 912 48,732 Engineer 4 42 11/17/1999 132 14,762 Consultant 5 58 2/7/2000 329 9,739 Clerical 6 46 2/23/2000 521 52,159 Skilled 7 38 3/30/2000 1,086 126,606 Director 8 55 3/10/2001 751 48,183 Skilled 9 29 11/9/2001 130 12,133 Lineman 10 54 4/27/02 190 14,452 Customer Service * * * Prior to experience period Sample Group Policy AntheniLife Ov 0 �f 1TI°'Jlrl ANTHEM LIFE INSURANCE COMPANY Home Office: Indianapolis, Indiana Administrative Office: P.O. Box 182361, Columbus, Obio 43218-2361 GROUP POLICY Anthem Life Insurance Company (we, our, or us) will pay the benefits provided in this Group Policy subject to all terms and conditions stated in this Group Policy. The Group Policy is governed by the laws of the state where the Group Policy is issued. All periods of time will begin and end at 12:00 midnight at the, beginning of the day specified at the Policyholder's address. i , Signed for Anthem Life Insurance Company, at Columbus, Ohio, on the Group Policy effective date. Nancy L. Purcell, Secretary John J. Gainor, President Group Insurance Policy Nonparticipating — The Group Policy Does Not Pay Dividends GP-1 September 4, 2003 James B. O'Neill II, CPPO, FNIGP The City's Purchasing Division 215 North Mason Street, 2" a Floor Fort Collins, Colorado 80524 RE: Plan Design Confirmation Dear Mr. O'Neill II, Arl"m Life Insurance Company f ix 182361 Columbus, OH 43218-2361 Tel 800 551-7285 Fax 814-433.8889 Anthem Life Thank you for the opportunity to provide a proposal for Basic Term Life, Supplemental Life, Dependent Life and LTD benefits for the employees of the City of Fort Collins. Anthem Life has made every effort to match the current level of benefits as outlined in the request for proposal. However, Anthem Life's standard policy provisions will apply, as our contract is filed in Colorado, where the contract will be issued. Deviations from current plan of benefits are outlined in the Additions and Exceptions document located in Section IV of the proposal. As a specialist in life and disability products, Anthem Life's total focus is on these product lines. We pride ourselves on meeting a diversity of customer needs. Anthem Life appreciates the opportunity to respond to this RFP and looks forward to working with The City of Fort Collins to meet and exceed its benefits administration needs. If you have any questions regarding this proposal, please contact Keith Slaughter, Underwriting Analyst at (614) 433-8341; or Gary Redabaugh, Senior Account Executive at (303) 831-3230; or Eden Ripingill Specialty Sales Executive at (303) 831-2493. Sincerely, John J. Gainor, President 1801 Watermark Drive • Suite 200 • Columbus • OH a 43215-7088 Table of Contents PolicySchedule ....................................................................................................................................3 GeneralInformation...........................................................................7............................., .....................3 EligibleClasses.......................................................................................................................................3 • .5 Group Policy Provisions. Our Representations and Agreements......................................................................................... ............ 5 Representations and Agreements of the Policyholder............................................................................5 EntireContract................................................................................................................................I.......6 Incontestability...................,...................................................................,.................................................. 6 Changesin the Group Policy..................................................................................................................6 Notices.......................................................................................................................:...:........................ 7 Term and Termination of the Group Policy............................................................................................7 GracePeriod........................................................................................................................................... 8 a GP-1 2 r T-N wKULMR . l.l� f Policy Schedule General Information Policyholder: (also referred to as Group) xx xx xx xx Affiliates, Subsidiaries, Divisions: xx Group Policy Effective Date: xx State of Issue: xx 'Premium Due Date: I` day of the month Eligible Classes ' Eligible classes are described below. A full description of the benefit provisions and other terms and conditions of coverage is provided in the Certificate(s), which are attached to and made a part of this Group Policy. Class 1 Eligible Class Definition: Employer's Premium Contribution: Effective Date of Coverage: Eligibility Waiting Period: Eligible Person: xx Term Life — xx % AD&D—xx% xx 1 st of month following date of hire xx None xx A person who satisfies the definition of an Eligible Person, as stated in the Definitions section, and is working at least 7 hours per week GP-1 3 Class 2 i Eligible Class Definition: xx Employer's Premium Contribution: Term Life — xx % AD&D — xx % Effective Date of Coverage:,' xx 1' of month following date of hire Eligibility Waiting Period: xx None Eligible Person: xx A person who satisfies the definition of an Eligible Person, as stated in,the Definitions section, and is working at least 7 hours, per week Class 3 Eligible Class Definition: xx Employer's Premium Contribution: Term Life — xx % AD&D — xx % } Effective Date of Coverage: xx I' of month following date of hire Eligibility Waiting Period: xx None Eligible Person: xx A person who satisfies the definition of an Eligible Person, as stated in the Definitions section, and is working at least 7 hours per week GP-1 4 , , VJ1 1, Group Policy Provisions Group Policy The Group Policy consists of this document, including any endorsements, riders or amendments, and the group application. Our Representations and Agreements 1. In consideration of payment of premiums and compliance by the Policyholder with all conditions and provisions set forth in the Group Policy, we shall provide or cause to be provided to enrolled Eligible Persons and their enrolled Dependents, the insurance coverage as described in the Group Policy, subject to all conditions and limitations contained herein. Although Eligible Persons are not parties to the Group Policy, the information provided in their applications is used to determine eligibility and benefits. 2. Premium rates will be determined based on our established underwriting and administrative practices. Initial premium rates are stated in the Premium Schedule. We may change premium 'rates as stated in the "Changes in the Group Policy" provision. 3. We will furnish for each enrolled Eligible Person a Certificate(s) which shall set forth a description of the benefits, the limitations thereof, and the conditions under which such benefits shall be provided. Representations and Agreements of the Policyholder 1. The Policyholder will give notification of eligibility to each Eligible Person who is or will become eligible for enrollment, and will obtain and submit to us an application on a form acceptable to us for each Eligible Person desiring to enroll. 2. The Policyholder will promptly forward to us all applications, notices or other writing received from Eligible Persons. 3. Premiums are payable in advance to us and are due on the premium due date stated in the Policy Schedule. The Policyholder shall pay the premium even if the Policyholder requires a contribution toward the premium from enrolled Eligible Persons. 4. The Policyholder will keep such records and furnish to us such periodic reports as may reasonably be required by us for the purpose of enrolling Eligible Persons under the Group Policy, processing terminations of coverage, effecting changes in coverage due to a change in family status, determining the premium amount payable by the Policyholder under the Group Policy, or for any other purpose reasonably related to the administration of the Group Policy. All documents or records that may have a bearing on the benefits or premiums under the Group Policy will be open for inspection. They will be available at all reasonable times while this Group Policy is in effect and for seven years after termination. 5. The Policyholder will make the Group Policy available for inspection at the Policyholder's main office during regular business hours. The Group Policy will be made available for such inspection by Covered Persons or Beneficiaries under the Group Policy, or representatives of such persons. 6. The Policyholder agrees that we may delegate our administrative duties to a third party, according to a written agreement between the third party and us. GP-1 5 V,��l��r��:11 Entire Contract The following documents will constitute the entire contract between, the Policyholder and us: the Group Policy, the individual applications thereof submitted by or for Eligible Persons in connection with this Group Policy; and our underwriting regulations, inbluding but not limited to our medical rules and administrative practices and procedures as adopted and/or, revised from time to time. Incontestability The life insurance portion of this Group Policy is incontestable after,two years from the Group Policy's effective date. Changes in the Group Policy I Except as otherwise provided below, no waiver, modification or change in any provision of the Group Policy shall be effective unless and until approved in writing by one of our officers and evidenced by an endorsement, rider or amendment to the Group Policy. , We reserve the right to change the benefit provisions and the terms and "conditions thereof provided for under the Group Policy by giving written notice to the Policyholder not less than 31 days prior to the effective date of such change. We also reserve the right to change the premium rates by giving written notice to the Policyholder not less than 31 days prior to the effective date of such change. If any change to the benefits or the premium rates is unacceptable to the Policyholder, the Policy older shall have the right to terminate coverage under the Group policy as stated in the "Term and Termination of the Group Policy" provision. Payment of the new premiums, or continued payment of current premiums in the event of a benefit change only, shall constitute acceptance of the change by the Policyholder. Any provisions of the Group Policy that are in conflict with; • federal law; or • the law of the state where the Group Policy is issued will be automatically amended to comply with the minimum requirements of such law, to the extent those requirements apply to this Group Policy. In the event that any provision of the Group Policy or the applicability thereof to any person or circumstance is held invalid by competent judiciary or regulatory authority, it shall not affect the validity or enforceability of any other provision of the Group Policy. GP-1 Notices Any notice or demand under the Group Policy by us to the Policyholder and all Covered Persons hereunder, shall be deemed to be sufficient for all purposes hereof, when such notice or demand'is made by us in writing and mailed or delivered to the Policyholder at its principal office shown on our records. Notices or demands under the Group Policy by the Policyholder to us shall be sufficient for all purposes hereof when such notices or demands are in writing and mailed or delivered to our administrative office. Term and Termination of the Group Policy This Group Policy begins on the effective Date shown in the Policy Schedule and will continue in force unless terminated as described below: l . We or the Policyholder may terminate the Group Policy without cause effective on any premium due date of the Group Policy, by giving written notice of termination to the other party at least 31 days prior to such premium due date. , 2. If the Policyholder defaults by failing to pay any required premium by the premium due date, the Group Policy will end automatically without notice on the premium due date when the Policyholder defaulted in payment, subject to the Grace Period provision. We may, at our sole di$cretion, accept late payment of a premium in default and reinstate the Group Policy with coverage made effective l back to the premium due date when the Policyholder defaulted in payment. Any acceptance of a late payment will not be considered a waiver of this provision in the event of any future failure of the Policyholder to make timely payment of premiums. Delivery of payment to us or our receipt of negotiation of a tendered premium payment through our automatic deposit procedures shall not be deemed acceptance of such premium payment nor a waiver of such termination. 3. If any change to the benefits or premium rates is unacceptable to the Policyholder, the Policyholder may terminate the Group Policy by giving us written notice of termination prior to the effective date of change. 4. Except as stated in the Incontestability provision, if in our judgment the Policyholder engages in misrepresentation and/or fraudulent conduct, the Group Policy may be cancelled (including retroactive cancellation) or rescinded without prior notice, effective as of the date the misrepresentation was made or the fraudulent conduct was performed, notwithstanding when the misrepresentation or fraudulent conduct was discovered. If the Group Policy is terminated, the Policyholder shall be Iiable for all premiums due to us up to the date of termination. Upon termination of the Group Policy, we shall cease to have any liability for benefits hereunder, except as provided in the following Grace Period provision. GP-1 Grace Period The Policyholder will be entitled to a grace period of 31 days after each premium due date except the first for payment of any premium due. If any overdue premium is not paid by the end of the grace period, the Group Policy will end as of the premium due date and we shall cease to have any liability hereunder, except: • as may otherwise be provided in the group coverage provisions; or • for any death benefit for life insurance which becomes payable during the grace period, unless we receive notice of termination from the Policyholder prior to the end of the grace period. The Policyholder will be liable to us for payment of premium for the Group's life insurance death benefit coverage which is continued during the grace period. Except as described above, any claims incurred during the grace period will not be paid unless and until premium is received before the end of the grace period. 1 n GP-1 8 SUMMARY OF THE LIFE AND HEALTH INSURANCE PROTECTION ASSOCIATION ACT AND NOTICE CONCERNING COVERAGE LIMITATIONS AND EXCLUSIONS INTRODUCTION Residents of Colorado who purchase life insurance, annuities, or health insurance should'know that the insurance companies licensed in this state to write these types of insurance are members of the Life and Health Insurance Protection Association. The purpose of this Association is to assure that Policyholders will be protected, within limits, in the unlikely event that a member insurer becomes financially unable to meet its obligations. If this should happen, the Association will assess its other member insurance companies for the money to pay the claims of insured persons who live in Colorado and, in some cases, to keep coverage in force. The valuable extra protection provided by these insurers through the Association is limited, however. As noted in the box below, this protection is not a substitute for consumers' care in selecting companies that are well -managed and financially stable. IMPORTANT DISCLAIMER The Life and Health Insurance Protection Association may not provide coverage for this Policy. If coverage is provided, it may be subject to substantiallimits or exclusions, and require residency in Colorado. You should not rely on coverage by the Life and Health insurance Protection Association in selecting an insurance company or in selecting an insurance Policy. Coverage is NOT provided for your Policy or any portion of it that is not guaranteed by the insurer or for which you have assumed the risk. Insurance companies or their agents are required by law to give or send you this notice. However, insurance companies and their agents are prohibited by law from using the existence of the Association to induce you to purchase any kind of insurance Policy. The state law that provides for this safety -net coverage is called the Life and Health Insurance Protection Association Act. Below is a brief summary of this law's coverages, exclusions, and limits. This summary does not cover all provisions of the law; nor does it in any way change anyone's rights or obligations under the Act or the rights or obligations of the Association. Coverage. Generally, individuals will be protected by the Life and Health Insurance Protection Association if they live in this state and hold a life or health insurance contract, or an annuity, or if they hold certificates under a group life or health insurance contract or annuity, issued by a member insurer. The beneficiaries, payees, or assignees of insured persons are protected as well, even if they live in another state. Exclusions From Coverage. Persons holding such policies or contracts are not protected by this Association if. GAN CO SERIES 95451 • they are not residents of the Slate of Colorado, except under certain very specific circumstances; the insurer was not authorized or licensed to do business in Colorado at the time the Policy or contract was issued; their Policy was issued by a non-profit hospital or health service corporation (e.g., the "Blues"), an HMO, a fraternal benefit society, a mandatory state pooling plan, a mutual assessment company or similar plan in which the Policyholder is subject to future assessments, or by an insurance exchange. The Association also does not provide coverage for: • any Policy or portion of a Policy which is not guaranteed by the insurer or for which the individual has assumed the risk; • any Policy of reinsurance (unless an assumption certificate was issued); • plans of employers, associations or similar entities to the extent they are self -funded or uninsured (that is, not insured by an'insurance company, even if an insurance company administers them); • interest rate yields that exceed an average rate; • dividends; • experience rating credits; • credits given iQ connection with the administration of a Policy or contract; • annuity contracts or group annuity certificates not owned'by an individual unless and to the extent guaranteed to an individual by the insurer, I , , • annuity contracts or group annuity certificates used by non-profit insurance companies to. provide retirement benefits for non-profit educational institutions and their employees; • policies, contracts, certificates, or subscriber agreements issued by a prepaid dental care plan; • sickness and accident insurance when written by a property and casualty insurer as part of an automobile insurance contract; • unallocated annuity contracts issued to an employee benefit plan protected finder the federal Pension Benefit Guaranty Corporation; ' • policies or contracts issued by an insurer which was insolvent or unable to fulfill its contractual t obligations as of July 1, 1991; P • policies or contracts covering persons who are not citizens or permanent residents of the United States; GAN CO SERIES 95451 • financial guarantees, funding agreements, or guaranteed investment contracts not containing mortality guarantees and not issued to or in connection with a specific employee benefit plan or governmental lottery; • any kind of insurance or annuity, the benefits of which are exclusively payable or determined by a separate account required by the terms of such insurance Policy or annuity maintained by the insurer or by a separate entity. Limits on Amount of Coverage. The Act also limits the amount the Association is obligated to pay out. The Association cannot pay more than what the insurance company would owe under a Policy or contract. Also, for any one insured life, the Association will pay a maximum of $300,000 — no matter how many policies and contracts there were with the same company, even if they provided different types of coverages. Within this overall $300,000 limit, the Association will not pay more than $100,000 in cash surrender values, $100,000 in disability insurance benefits, $100,000 in present value of annuity benefits, or $300,000 in life insurance death benefits — again, no matter how many policies and contracts there were with the same company, and no matter how many different types of coverages. This Information is Provided By: Life and Health Insurance Protection Association Colorado Division of Insurance P.O. Box 480025 1560 Broadway, Suite 850 Denver, CO 80248-0025 Denver, CO 80202 303 572-1710 303 894-7499 GAN CO SERIES 95451