Question:

How are benefits calculated?

Answer:

Under the terms of your short term disability (STD) policy, you must satisfy a three-day waiting period before any STD benefits are payable, if you are disabled due to an illness. The waiting period generally commences on the date that we find you to be disabled. If you are claiming disability due to an injury, there generally is no waiting period, assuming you seek treatment immediately. Generally, STD benefits are calculated based on a weekly rate and paid monthly. STD benefits are payable for every day of the week, for the length of your disability, up to the plan maximum. Please note that your weekly benefit cannot exceed 66-2/3% of your weekly salary. Under the terms of your long term disability (LTD) policy, you must satisfy an elimination period before any LTD benefits are payable. An elimination period is a certain number of calendar days during which you must remain disabled, and for which no benefits will be paid, commencing on the date that we find you to be disabled. You may use sick leave, vacation pay, or unpaid leave during the elimination period, depending upon your employer's policy. Benefits are never payable for the elimination period. The length of the elimination period varies depending on your specific coverage. During the 24-month period following your date of disability, your LTD benefits will be calculated and paid on a contract day basis. Under this method, we divide your covered salary by the number of scheduled work days in your contracted work year to yield a daily rate of pay. We then multiply this amount by the percent of the insured salary for which your LTD plan guarantees replacement. Each month, this daily rate of pay is multiplied by the number of days that you would normally have worked that month. EXAMPLE OF THE CONTRACT DAY METHOD OF BENEFIT CALCULATION: Date of Disability: February 24, 2007 Elimination Period: 60 days Date eligible for Benefits: April 24, 2007 Covered Salary: $38,000.00 Percent of Covered Salary Insured: 90% Days in contracted work year: 190 days Daily Gross Benefit: $180.00 ($38,000.00 ÷ 190 x 90%) After the initial 24-month period, we will "annualize" your covered salary. This simply means that we will spread your LTD benefits across the entire calendar year rather than your contracted calendar days. To calculate your LTD benefits under this method, we will divide your annual covered salary by 12 and multiply this amount by the percent of the insured salary for which your LTD plan guarantees replacement. BENEFIT CALCULATION METHOD: ANNUALIZED SALARY Date of Disability: February 24, 2007 Elimination Period: 60 days Date eligible for Benefits: April 24, 2007 Covered Salary: $36,000.00 Percent of Covered Salary Insured: 90% Monthly Gross Benefit: $2,700.00 ($36,000.00 ÷ 12 x 90%)