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deceased employee's vested death benefit, and the carrier paid
the Trust the cash surrender value associated with the policy.
Under the universal life policies acquired by the Trust, the
Trust could obtain a policy's cash surrender value before the
insured died by surrendering the policy. The amount received was
usually reduced by a surrender charge during the first several
years of the policy.
A death benefit was not payable if a Covered Employee died
on or after the date he or she terminated employment or was
discharged for cause. In the case of an owner/employee, a death
benefit was not payable when he or she terminated his or her
employment. A death benefit also was not payable when the
owner/employee continued to work but reached the date that was
the later of age 70-1/2 or the 10th anniversary of his or her
participation in the plan.
Upon termination of employment, a Covered Employee could,
with Prime's approval, elect to convert to individual coverage or
purchase his or her life insurance policy for its cash surrender
value. Absent such an election, the policy was surrendered or
transferred to the life of another Covered Employee. The
forfeited proceeds from the sale or surrender of life insurance
were segregated into the Suspense Account and used to increase
the employer's Covered Employee's DWB's or death benefits, to
provide new welfare benefits, to provide benefits for replacement
employees, or to distribute to the Covered Employees if and when
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