The Federal Employees’ Group Life Insurance (FEGLI) Program, the most extensive group life insurance program in the world, was established by the Federal Government in 1954 to provide Basic life insurance coverage for Federal employees and retirees.
However, this article will dwell on two features of the Federal Employees Group Life Insurance (FEGLI) program that is not widely known but could be advantageous to the beneficiaries in certain circumstances.
The Two FEGLI Features That Are Mutually Exclusive
The first feature allows you to transfer the ownership and management of your Basic, Standard Optional, and Additional Optional insurance.
While the second feature enables you to claim your Basic insurance policy if your attending physician has informed you that you have a terminal disease.
However, you should know that these features are mutually exclusive by law. So if you choose one feature, you won’t have the option to go with the other.
1. Assignment of Benefits
With this feature, you can designate/transfer the ownership and management of your Basic, Standard, Optional, and Additional Optional insurance benefits to another person, corporation, or irrevocable trust (with one exception).
If you make this irreversible transfer, you will not be able to make any changes to the person who would be the beneficiary of your policy or cancel your policy in the future.
Exception
You can’t transfer ownership if a court has issued a decree of divorce, annulment, or legal separation and stated explicitly that you must pay your FEGLI benefits to someone other than yourself.
2. Living Benefits
A living benefit is an early payout of essential life insurance benefits made directly to the policyholder, as opposed to a beneficiary or survivor of the policyholder’s policy. Individuals can apply for a “living benefit” if they have been diagnosed with a terminal illness and have a life expectancy of nine months or less.
Other points to note about Living Benefits
- It is only possible to make one selection for a living benefit, and once that selection has been finalized, you can not alter it in any way. On the other hand, if you want the total living benefit, you will be given all your Basic coverage in cash.
- If you select partial payment of your living benefit, the payout you would get from the policy will be proportionately (half) lower than the total amount. The sum is paid in multiples of $1,000.
- If you received the maximum amount of your living benefit, you would no longer be responsible for paying any premiums. Therefore, it would reduce your monthly rates if you applied for a partial benefit.
- Full living benefits are only available to compensationers and retirees.
- If you choose the full living benefit, your survivors will not be entitled to any primary insurance benefit if you die. But a partial benefit leaves them with the remaining.
- Be aware that the monetary value of the amount still owed to you will remain unchanged. Therefore, it does not matter how much your salary increases.
- The amount you receive from a living benefit will often be higher than that provided by a business specializing in viatical settlements. This is because there is no profit margin involved in a living benefit.
- If you are eligible to receive a living benefit under your FEGLI insurance, the amount you will be granted will be less than the face value listed in your policy. This reduction indicates the interest that the life insurance fund will no longer get as a result of the fact that they paid you ahead of time.
These features are essential to maximize the various benefits for both participants and beneficiaries.
Contact Information:
Email: [email protected]
Phone: 9568933225
Bio:
Rick Viader is a Federal Retirement Consultant that uses proven strategies to help federal employees achieve their financial goals and make sure they receive all the benefits they worked so hard to achieve.
In helping federal employees, Rick has seen the need to offer retirement plan coaching where Human Resources departments either could not or were not able to assist. For almost 14 years, Rick has specialized in using federal government benefits and retirement systems to maximize retirement incomes.
His goals are to guide federal employees to achieve their financial goals while maximizing their retirement incomes.
