Retirement Contribution Disability Insurance
A missing piece of your financial security
Your ongoing contributions to your 401(k) or other qualified retirement plan are dependent on your continued ability to work because contributions can only be funded by earned income. Should a serious illness or accident prevent you from earning an income, the ABE-sponsored Group Retirement Contribution Disability Plan would help you continue funding your retirement savings by providing a monthly disability benefit dedicated to the purchase and funding of a fixed annuity designed to allow tax-deferred savings for retirement income, as described below. (This Plan is not available to residents of Oregon, Guam, Puerto Rico, Virgin Islands, all U.S. Territories, and all foreign countries.)
Your own occupation protection
This Plan will pay benefits for up to five years if you are totally disabled due to sickness or injury and are unable to perform the substantial and material duties of your regular occupation, including your specialty in the practice of law. After five years, benefits will continue if your disability prevents you from performing the material duties of any gainful occupation for which you are reasonably qualified for by training, education or experience.
Select your retirement contribution benefit
You select your monthly retirement contribution disability benefit, from a minimum of $1,000 up to a maximum of $3,500 a month. Choose the amount that best approximates your current contributions to your qualified retirement plan (available from your employer), on a monthly basis, rounded down to the nearest $100. You may include any matching amounts from your employer. If your monthly contribution exceeds $1,200, we will send you a request for documentation of your current qualified retirement plan contribution.
How benefits are paid
When a disability claim is approved, monthly benefits are paid into a fixed annuity with tax-deferred earnings. If you are disabled, you are free to choose any fixed annuity in which to place your monthly benefits. If you do not make a choice, the AG HorizonFlex Annuity issued by American General Life Insurance Company (Houston, TX), Contract No. 04371, will be used. (In New York, the annuity will be issued by the United States Life Insurance Company in the City of New York.) Fixed annuities generally offer a guaranteed rate of return* below which the current rate will never fall and earnings will accumulate tax-deferred. Consult your tax advisor for details. Access: Amounts contributed to a fixed annuity are subject to withdrawal penalties. For example, the AG HorizonFlex Annuity imposes penalties on funds withdrawn within the first eight years following the first contribution. Penalties are 8% of account value in the first three years, 7% in year four, 6% in year five, 5% in year six, 3% in year seven, and 1% in year eight. Withdrawals prior to age 59-1/2 are also subject to a Federal tax penalty of 10% of the amount withdrawn in addition to the taxes ordinarily payable on an annuity distribution. Annuity contracts have widely varying terms. Before choosing the annuity to be funded if you become disabled, read the contract carefully.
If you wish to assign or transfer any or all benefits payable under the Plan to an institution of your choice, please write to the American Bar Endowment, at 321 North Clark Street, Chicago, IL, 60654-7648.
*The guarantee is based on the claims-paying ability of American General Life Insurance Company or The United States Life Insurance Company in the City of New York (New York, New York), whichever is the insurance company that issues the annuity.
Coordination with other disability plans
Many disability policies set a limit on the percentage of pre-disability income that they will replace. The United States Life Insurance Company will not count this Plan toward that limit on their disability policies, including Group disability policies sponsored by ABE. Check with your disability carrier to be sure it will do the same.
Who can apply
To be eligible for this Plan, you must be an ABA member under age 65, and be actively working full time (at least 30 hours per week) for at least 42 weeks in a calendar year. No health exams or tests are usually required.* Acceptance is subject to evidence of insurability as determined by the underwriting company.
*Issuance of a Certificate of Insurance or payment of benefits may depend upon the answers given in the application and the truthfulness of those answers. Pre-existing conditions limitations may apply.
Effective date
Coverage will begin on the first day of the month following the date your application is approved. You must be actively at work on the date insurance is to take effect; otherwise, the insurance will take effect on the date you return to work. Approval of your application and issuance of a Certificate of Insurance under the Group retirement disability policy will depend upon the information given on your application.
Waiting period
Because this plan is designed to cover you in the event of long-term disability, the waiting period between onset of disability and beginning of benefits is either 180 days or 365 days, whichever you select. The longer the waiting period, the lower the premium costs.
Long-term benefit period
Benefits are payable to age 65 if disability begins prior to age 63 and for two years for a disability beginning on or after age 63. Benefits will end if you are no longer disabled, die, or reach the end of benefit duration.
Mental Illness: There is a two-year limit for disabilities related to mental illness. The policy defines mental illness as a psychiatric or psychological condition regardless of cause such as schizophrenia, depression, manic-depressive or bipolar illness, anxiety, personality disorders and/or adjustment disorders or other conditions. These conditions are usually treated by a mental-health provider or other qualified provider using psychotherapy, psychotropic drugs, or other similar methods of treatment.
Renewable to age 70
Coverage is renewable to age 70 as long as you pay the premium when due, unless you retire or cease to be actively at work for reasons other than total disability, the group policy ends or you cease to be a member of the ABA/ABE. Note: Benefits for a disability beginning on or after age 63 are payable for a maximum of two years.
Waiver of premium
Your premium payments will be waived beginning with the next premium due date when you start receiving benefits from this Plan. Waiver will continue for as long as you are receiving benefits from this Plan.
Exclusions
No benefit will be paid for a disability due to intentionally self-inflicted injury or attempted suicide; a declared or undeclared war or an act of war; service in the armed forces of any country, except during a temporary active duty assignment with the U.S. armed forces of less than eight weeks duration; or committing a crime or an attempt to do so. The benefits to be paid for a complication of pregnancy will be the same as those paid for a sickness.
The company behind the plan
The disability insurance portion of this Plan is underwritten by The United States Life Insurance Company in the City of New York. The most prominent independent rating agencies continue to recognize The United States Life Insurance Company in the City of New York in terms of insurer financial strength. For current insurer financial strength ratings, please consult the Web site.
This is only a brief summary of benefits and is subject to the terms, conditions, exclusions and limitations of group policy number G-610,155, form number G-19000. Coverage may vary and may not be available in all states.
FAQ
Q. If I already have disability insurance, do I really need this Plan too?
A. Yes. Standard disability coverage replaces a portion of lost current income. This coverage helps you meet a completely separate need -- replacing your qualified retirement plan contributions in the event of your disability. This Plan does not duplicate your current disability insurance. (See "Coordination with other disability plans" above.)
Q. Can the benefit amount include matching contributions my employer is currently making?
A. Yes. To continue your qualified retirement plan funding at or near current levels, the benefit you choose should include any matching amount from your employer.
Q. What monthly benefit should I choose?
A. You may choose up to $3,500 per month. Select an amount that most closely approximates your current monthly retirement contribution, rounded down to the nearest $100 (contribution cannot be less than $1,000 and cannot exceed $3,500). Include any matching amount from your employer. If your monthly retirement contribution disability benefit is to be more than $1,200, we will request documentation of your current qualified retirement plan monthly contribution after we receive your application. This documentation should be readily available from your HR department or benefits officer.
Q. Will my coverage increase as I increase the amount of my retirement plan contribution?
A. Not automatically. The monthly contribution you choose now will remain the same unless you request a benefit increase in the future and that request is approved by the insurance company.
Q. In the event of my death after having received monthly retirement contribution benefits under this Plan, who will receive my resulting annuity?
A. When a disability claim is made, you will be able to designate whomever you wish as your beneficiary for the annuity purchased through this Plan. That beneficiary’s rights will be determined by the terms of the annuity you selected.
Q. When may I begin receiving my retirement benefits from this Plan?
A. As with most retirement plans, benefits become payable to you at the age of 59 1/2. See "How benefits are paid" above for sample withdrawal penalties.
Q. Is the annuity purchased with my disability benefits subject to the required minimum distribution rule?
A. No. Because the annuity is neither an employer-sponsored retirement plan nor any form of IRA, there is no required minimum distribution requirement.
Q. What is the purpose of the "election form?"
A. Signing the election form on the back of the application for this Plan authorizes United States Life to pay your monthly benefit into a fixed annuity contract should you become disabled. At the time of claim, you can consult with the advisor(s) of your choice to choose an annuity for your benefits; if you do not, US Life will purchase the HorizonFlex annuity (or its successor) with your monthly benefits.
Q. If I am disabled, will I still have to pay the premiums on this Plan?
A. Should you be approved for benefits under this Plan, your premium payments will be waived beginning with the next premium due date after you have received benefits for six consecutive months. This waiver of premium will continue for as long as you are receiving benefits from this Plan.
Q. What distinguishes this ABE-sponsored retirement contribution disability insurance from all other plans?
A. This group policy has a unique charitable giving feature that enables members to donate any experience credits that may be payable on the policy to the not-for-profit American Bar Endowment for its charitable purposes. Insured members who donate their experience credits are eligible for a charitable tax deduction. See "Assignment of experience credits" below.
Q. What happens if I never become disabled?
A. As with any disability policy, if you never become disabled, no benefits will be paid. You will have continued to work and earn an income from which you could make retirement contributions. You will have enjoyed the peace of mind that comes with having protected yourself and your family.
30 Day Free Look
To apply for coverage, simply complete the application form, sign, date, and return to us with your first premium payment. After your application has been approved, you will receive a Certificate of Insurance. Take up to 30 days (without claim) to review it carefully. If this plan isn't everything you expect, simply write "cancel" and return the Certificate within 30 days, and you will promptly receive full refund of any premiums paid. You're under no further obligation.
Schedule Of Benefits And Quarterly Premiums
Assignment of Experience Credits
How Your Assignment of Experience Credits Works– Your Policy’s Unique Charitable Giving Feature
Founded in 1942, the American Bar Endowment is a §501(c)(3) not-for-profit organization composed of members of the American Bar Association. ABE makes annual grants to the American Bar Foundation and ABA Fund for Justice and Education to fulfill ABE’s charitable purpose of improving the administration of justice, one of our profession’s highest obligations, by funding research, public service and educational projects in the field of law. ABE also maintains a Legal Legacy Fund for the permanent support of its grantees. By participating in the Endowment’s group insurance programs, designed for and available only to ABA members, members can contribute to these funding efforts. Attorneys who enroll in ABE-sponsored group insurance programs agree that their share of any experience credits payable on the group policies may be retained by the Endowment for its charitable purposes unless reclaimed as outlined below. The Internal Revenue Service has ruled that members who leave their experience credits with the Endowment are eligible for a charitable contribution deduction on their individual income tax returns.
Members who donate experience credits to ABE make a difference. These funds, after administrative expenses, are the primary source of ABE’s charitable grants and additions to the Legal Legacy Fund. Insured members who donate their experience credits are helping to meet their professional and public responsibilities, as well as obtaining valuable coverage for their families. About 85% of members donate their experience credits, and these members are notified each year in late January of the amount, if any, of the experience credit donation for the prior year. (Dividends are not guaranteed, and in any given year, a given plan may not pay a experience credit; experience credits will vary from year to year.)
Members who wish to request a refund of their experience credits may do so. The approximate percentage of premium available for refund (if any) on each plan will be published in each November issue of the ABA Journal along with ABE’s Annual Report. You do not need to wait for this information as refund requests are accepted beginning January 1. To request that experience credits be paid to you rather than donated to ABE: After the first policy year of your participation, a written request for refund (by mail, fax, or e-mail to experiencecredits@abendowment.org) must be made each year and must reach the Endowment by December 15. When your refund request is received, a confirmation will be sent. Retain this for your records as proof your request was timely received. If your confirmation is not received within 3 weeks, contact the Endowment promptly to obtain another copy.
If you receive a contribution notice and you did not intend to make a contribution, you may request a one-time waiver of the December 15 deadline by asking for a refund, if you have not previously requested such a waiver. Each member is entitled to one and only one exception to the deadline requirement.
Please note: Members who do not want to contribute experience credits to ABE are required to “opt out” each year, using the procedures above. When members sign the application, they are agreeing to make an annual decision whether to contribute. Do not sign the application if you do not agree with these procedures.
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THIS IS A SUMMARY of the principal provisions of the group insurance program offered through the American Bar Endowment for its members. IT IS NOT TO BE CONSIDERED A CONTRACT OF INSURANCE. This plan is underwritten by the United States Life Insurance Company in the City of New York, NAIC#70106, domiciled in New York state with their principal place of business located at 70 Pine Street, New York, NY 10270, licensed in all states, plus DC, except PR. This information is a brief summary of benefits only, and is subject to the terms, conditions, exclusions, and limitations of Group Policy No. G-610,155, Form No. G-19000. Coverage may vary or may not be available in all states.
We will be happy to answer your questions. Just call 800-621-8981 or e-mail us at information@abendowment.org
