All ABP members are covered by employer-paid life insurance, payable to their designated beneficiaries, in the amount of three and one-half times the employee’s annual base salary. This coverage is available without a medical examination to members under age 60. Newly enrolled members 60 years of age or older must undergo a medical examination to qualify. The Internal Revenue Service classifies all life insurance coverage over $50,000 as a fringe benefit subject to taxation. The amount of the life insurance coverage is not taxable, but the premium required to pay for the life insurance coverage is taxable. Members can elect to waive insurance coverage over $50,000 at any time; for further information on this topic, you may contact the Division of Pensions and Benefits (see bottom of this fact sheet) and request Fact Sheet #22, Waiver of Non- Contributory Group Life Insurance over $50,000.
ABP members on leave of absence without pay continue to be insured for:
- up to two years while on approved leave of absence for illness;
- up to one year while on approved leave of absence to fulfill a residency requirement for an advanced degree; or
- up to 93 days while on leave for other reasons, including child care.
Upon retirement, life insurance reduces to one-half of the annual base salary. This life insurance coverage is available in retirement only to members age 60 or older and only if the member has completed 10 years of participation in the ABP at an eligible New
Jersey institution of higher education. The member also had to be an active employee in the twelve months immediately preceding the initial receipt of a retirement annuity payment. Insurance coverage ceases 31 days after termination of employment. During the 31-day period following termination of employment, the member may convert existing group life insurance coverage (less any amount of coverage carried over into retirement) into an individual whole life policy, without medical examination.
For more information, download Fact Sheet #13, Conversion of Group Life Insurance.