Taking living benefits from the Federal Employees Group Life Insurance (FEGLI) program is something participants hope they won’t have to consider, but taking the time to understand the options could prove beneficial in the event of a terminal illness. If fate deals such a diagnosis, and the prognosis indicates a life expectancy of nine months or less, both Federal annuitants and employees can choose to take their Basic coverage amount as a lump-sum. For employees who haven’t retired, however, they can elect a partial amount, meaning the unused portion would still be payable to survivors upon death, and premiums would continue to be deducted from the pension’s survivor benefit. Federal retirees who request the living benefit must receive the full amount, and thus eliminate any Basic FEGLI benefit for their survivor. FEGLI options A, B, and C are completely unaffected by taking FEGLI benefits while alive. The premiums will continue to be deducted. Also of note, the amount one receives is reduced due to the lost earnings to the life insurance fund, and the living benefit cannot be taken if the insurance is assigned for a loan. Should the patient outlive their doctor’s timetable for survival, there is no requirement to repay the money received.
Until Next Time,
**Written by Benjamin Derge, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.