(a) A separate fund to be known as the Term Life Insurance Fund is hereby established within the Teachers' Retirement System of Alabama. Such fund shall consist of all monies paid by the employers for term life insurance, and of the investment earnings of such monies and all such funds shall be used only for the payment of benefits provided by this section.

(b) Commencing October 1, 1995, upon proof satisfactory to the board of the death of a contributing member who is a full-time employee there shall be paid in the form of a term life insurance benefit the sum of $15,000. On account of the death of a part-time employee, the benefit provided herein shall be prorated based on the employee's percent of full-time employment. This benefit shall be paid to the designated beneficiary on file with the Teachers' Retirement System. For purposes of this section, a person shall be deemed a contributing member if (1) he or she is in active pay status at the time of death or (2) he or she dies within 90 days of being in active pay status.

(c) The Board of Control of the Teachers' Retirement System shall determine annually the amount to pay the cost of the benefits provided in this section as a percentage rate of earnable compensation of members required to be paid to the Teachers' Retirement System. The employers' payment on account of the benefits provided in this section shall be paid in the same manner and from the same source of funds as is provided in Section 16-25-21, it being the intent of the Legislature that the cost of providing the benefits provided for in this section shall be distributed from all funds in proportion to the salaries paid therefrom for active members.