Two Mutually Exclusive FEGLI Features

While several aspects of the Federal Employees Group Life Insurance program, or FEGLI, may not be well understood, they provide several benefits depending on your situation. The assignment of benefits and living benefits are two examples of mutually exclusive features that may benefit others in your stead. What does it mean to be mutually exclusive? While you may choose to place your life insurance benefits in the name of another individual or cash in on your Basic insurance in the case of terminal illness, you cannot choose both. Once you elect for one or the other, according to the law, you cannot opt for the other.

Living benefits are intended to serve individuals facing a terminal illness with a life expectancy of nine months or less. By opting for a living benefit, you can accelerate the payment of your insurance benefits as the policyholder. While this only applies to Basic insurance, it’s important to note you forego a beneficiary or survivor of any kind, as you are cashing in on the benefits.

This type of election may only be executed once, and there is no option for a reversal. Once you choose full living benefits, you are cashing in on the Basic policy entirely, whereas a partial living benefit cashes in on a specific portion. Typically, a partial living benefit is done in increments of $1,000, alongside a premium reduction. This is a stark comparison to a full living benefit, which eliminates premiums due to the process of cashing in on the total amount. Plus, the election of full living benefits only applies to compensationers and retirees.

By choosing a full living benefit, you must be fully aware of how it affects any of your survivors. If you opt to receive a full living benefit, survivors are ineligible to receive benefits upon the policyholder’s death. Partial benefits, on the other hand, leave survivors with a specific portion of the remaining benefits upon the policyholder’s death. In terms of partial benefits, however, the amount is frozen at withdrawal, meaning the amount will cease to increase with time. Plus, the amount of a FEGLI living benefit will be further decreased compared to the policy’s face value. This example is representative of any interest lost due to the early payment.

Assignment of benefits enables policyholders to transfer ownership to another individual with a single exception. Unfortunately, you are ineligible to complete transference of ownership should a court issue a decree of divorce, legal separation, or annulment. This would cause your FEGLI benefits to be issued to another individual, thereby preventing transference of ownership. In this case, you will be unable to make changes to the beneficiary or cancel your life insurance policy. In any event, should you assign your FEGLI to another, you essentially agree to forego ownership of your Basic insurance for good. The newly assigned individual will become the beneficiary, whereas you are still responsible for paying premiums on time.

Contact Information:
Email: [email protected]
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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.