ALPA Insurance

ALPA organized 75 years ago to look after the interests of its members, and over time those interests have been constantly redefined and refined. More than 50 years ago, the Association realized that airline pilots who wanted life insurance needed a policy that was specially tailored to their needs. ALPA's group term policy was devised, and ever since then, the people who know pilots best -- pilots themselves -- have been designing insurance plans for ALPA's members.

The pilots who make up ALPA's National Retirement and Insurance Committee meet six times a year to review plans and find the best ways to market, fund, and insure them. The ALPA Membership and Council Services staff is the administrative arm of that Committee, taking care of the heavy lifting --dispensing technical advice, ensuring that the plans are well costed and funded, billing, reconciling premiums, issuing certificates of coverage on approval, and reviewing claims when they come in to confirm eligibility and to be sure the forms are complete.

The staff regularly negotiates with companies for favorable rates. For example, the amounts that New York Life, the underwriter for the Group Term Life policy, has had to pay out for ALPA policies in the last year have been less than the premiums the company received. When applicable, the company shares such surpluses with its customers -- ALPA policyholders --in the form of a dividend.

The best example of pilots' unique insurance needs is Loss of License. Many companies offer a disability policy, but they normally define "disability" broadly as preventing many kinds of employment. Loss of License is based on an ALPA-negotiated own occupation definition of disability, which applies only to losing the FAA airman medical certificate. Conditions, such as being an insulin-dependent diabetic, for example, may prevent a pilot from flying, but not from engaging in other types of employment. If a pilot's medical certificate is withdrawn (and one estimate is that 30 percent of all pilots lose their medical certification, at least temporarily, by the time they're 60), the Loss of License policy kicks in after a 12-month wait.

Loss of License comes in two forms: a monthly benefit of as much as $3,600 for 48 months or a lump sum as large as $250,000 (based on age at the time of disability).

The lump sum could be used, for example, to train for a new profession or to buy a business if the claimant is unlikely to continue in the piloting profession. The monthly payment might be chosen by a pilot who anticipates that he or she will eventually be able to fly again and will need monthly support until then.

The Loss of License programs have 12,800 ALPA participants in the monthly version and 8,650 choosing to be insured for a lump sum. Apprentice members make up 3,250 of each figure.

Those high numbers for apprentices have a simple cause: Loss of License protection in both $1,200 monthly and $25,000 lump-sum programs are free to apprentices, a benefit from ALPA (with the option under the monthly plan of paying a reduced rate for higher coverage). At the end of the probationary period, the apprentice coverage can be billed to the member without providing evidence of insurability.

The other no-cost plan for apprentices is Group Term Life Insurance, the oldest of ALPA's plans and the most popular, with an enrollment of more than 20,000 pilots. This insurance, with maximum benefits of $250,000, has no exclusions for cause of death. It covers the pilot during any flying: civil, military, or recreational (coverage not easy to find in the wider marketplace).

ALPA also offers its members the 10-Year-Level Term Life Insurance plan, now with an enrollment of more than 1,100. This plan can combine with the Group Term plan to provide coverage as high as $1.5 million, and its benefits and premiums remain fixed for its first 10 years. Suicide during the first two years of the plan is its only excluded cause of death.

ALPA's Short-Term Disability Insurance, with monthly benefit options of as much as $3,000 for 12 months, can be partnered with Loss of License (LOL) Plus Insurance, which extends the regular 48-month LOL period beyond own occupation to inability to engage in any occupation for which the pilot is qualified by education, training, or experience.

These plans all serve to protect the ALPA member during his or her working life, but ALPA also provides Long-Term Care Insurance for needs long after retirement or if a pilot becomes disabled before retiring. A recent survey revealed that 30 percent of Americans think long-term care insurance is necessary, but only 10 percent actually have it.

John Hancock Life Insurance Company, one of the leaders in the insurance market, is the carrier of ALPA's plan, which provides daily maximum benefits for nursing home stays as well as for home health care. A bonus to this plan is that it's available not only to members but also to their parents and in-laws.

Most of these plans are intended to be secondary to those offered through a pilot's company, but their portability makes them invaluable stopgaps in case of furlough or change of employer.