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Electing a Survivor Annuity: Follow Legal Requirements or Lose the Benefit

Survivor Anniuty

Project Specialist
Food and Drug Administration
Fri Dec 18, 2009 9:13 AM

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Wow, the longer I stay with the federal government, the more I find out about all of the "hidden" clauses, nuances, etc. It's amazing. I just turned 60 years old, and all of a sudden my life insurance premiums doubled! When I called Benefits they told me that it was my responsibility to know what's in my policy. I argued that it's been 18 years. Who knew? Well, to make a long story, short, what I was told is that at the age of 40 your premiums go up every 5 years. At the age of 60 it doubles. At the age of 65 it triples. And, it's not a cash value policy! So, here I am, not being able to afford for my premium to double, had to change my coverage from the maximum (which would have left my daughter and two grandsons approx. $400,000) to the standard option ($65,000). It's a shame. I keep thinking about all of the money I socked into this plan just to have to cancel it at this juncture in my career. So, I warn everyone to read the fine print! An outside policy may be better.

Re: Survivor Anniuty

Fed Employee
DOD
Fri Dec 18, 2009 10:21 AM
I didn't buy insurance to leave it to my kids! It's to cover any outstanding debts I might have when I die.

Re: Survivor Anniuty

Analyst
State
Fri Dec 18, 2009 11:00 AM
FEGLI tends to act like a monopoly and can be a rip-off. I abandoned it soon after joining the federal service and have been with WAEPA ever since. My premiums are lower, benefits greater, and typically receive up to a 25% premium refund check from WAEPA when the number and amount of claims for a given year have not been excessive. I'm sorry if I sound like a commercial; I am merely another federal employee. It's just that WAEPA was established for federal employees several years before FEGLI and is just a much better alternative for a great majority of us.

Re: Survivor Anniuty

HR
Fed
Fri Dec 18, 2009 11:08 AM
FEGLI is term life insurance, so there is no cash value. This is spelled out in the introduction to the FEGLI handbook (http://opm.gov/insure/life/reference/handbook/fegli02.asp). It's sort of like renting- you are paying a lower amount than if you bought to have the coverage during the policy, but you don't get any ownership out of it. Whole life policies are generally more expensive.

Term life insurance policies (not just FEGLI) generally get more expensive the older you become, and the increases can be significant once you hit 45 or 50. The advantage of FEGLI for many employees is not having your premiums based on your health. For young and healthy people, FEGLI may not be the most cost effective option.

You actually don't need to read the fine print regarding FEGLI for the rate information. If you go to the FEGLI site on OPM (http://opm.gov/insure/life/index.asp) and click on "rates" or use the calculator, it shows the increasing rates by age.

Cost associated with a survivor's annuity?

Diversity Manager
HHS
Fri Dec 18, 2009 10:56 AM

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Wait a sec. There should be a cost associated with a survivor's annuity, right?

The difference between my "stand alone" annuity and one with a survivor's benefit (25% or 50%) is substantial.

If the couple had not been paying that cost, they had no reason to assume she would receive a survivor's annuity, right?

Re: Cost associated with a survivor's annuity?

worker
Fed
Mon Dec 21, 2009 8:50 AM
Actiually diversity manager HHS or dol (really retired military) the cost is 3% of the first $3000 and 10% of the remainder if it is elected at the time of retirement.
In this case, I believe, but cannot be totally sure, the retiree returns the difference between the amount that was collected and the amount that should have been collected, plus interest, and then collects the amount that should be collected. Retirement specialists, please help me with this one.

Incomplete info in article

Retired
Forest Service
Fri Dec 18, 2009 3:06 PM

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I am confused by this article. I can accept reject on the life insurance portion, but not so on the survivor's annuity on his pension. If he submitted her name for survivor benefit on his pension annuity, then they would have reduced his annuity accordingly. Either he didn't pay attention to the fact that his annuity had not been reduced then he missed more than forms. He never paid for the annuity. On the other hand, if his annuity was reduced, then she has a bullet proof case for receiving the annuity because OPM collected the 10% (or other amount depending on age differences) for the years up to his death. On pension, they can't hide behind forms, because you are in effect purchasing the annuity.

Re: Incomplete info in article

Diversity Manager
DOL
Sat Dec 19, 2009 9:35 PM
Exactly he didn't pay for it and she didn't get it. She was trying to scam the governmnet crying hardship and 'he didn't know" PLEEEASE

Re: Incomplete info in article

Ms. B
OPM-Retirement
Sun Dec 20, 2009 4:41 PM
That is not true. He would had to have elected that particular spouse, regardless of whether annuity was reduced to provide a survivor annuity or not.

Re: Incomplete info in article

worker
Fed
Mon Dec 21, 2009 8:55 AM
To diversity manager DOL or HHS or really retired military,

perhaps the retiree told the spouse he took care of it. How would she know otherwise? She probaly has no expertise in the subject. There may be no scam. Just a lack of knowledge.
Your comments do not show a wealth of knowledge either.

Re: Incomplete info in article

EEO Gal
DHS
Mon Dec 21, 2009 1:26 PM
It's my understanding that the spouse MUST sign an acknowledgement if the retiree chooses anything less than the maximum survivor's benefit. If the retiree chooses NO annuity, or a decreased one, the spouse must provide consent (page 199).

I found this tidbit in the 2009 Federal Employees Almanac (55th anniv edition).

It appears that the couple was receiving and enjoying the retiree's full annuity. Once he passed away, the spouse wanted a piece of it, though they had not been paying for it via a reduced annuity.

Right?

Re: Incomplete info in article

Auditor
various
Wed Dec 23, 2009 10:22 AM
EEO Gal - wouldn't the election or waiving the survivor annuity apply at the time the annuity was originally begun? He was married years after retirement, so would you really have to re-sign all the paperwork again? I mean, I would if I were getting a divorce and the survivor's annuity wasn't granted to my ex, but I cannot see how OPM would force someone who was not married when they separated from service to sign paperwork.

Odd

Sup IT Tech
DoN
Mon Dec 21, 2009 8:44 AM

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seems odd to me that the Gov't has forms for EVERYTHING but not this important benefit election.

Survivor Benefits

IT Support Spec
DoN
Mon Dec 21, 2009 10:16 AM

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If you marry 9 months+ AFTER retirement, your spouse gets full benefits whether you want them to or not. If you are single when you retire and marry afterwards the election is optional. Your reduced annuity start from that point on. If a spouse dies before retiree, the retiree's annuity it restored to full amount. The unfair aspect is a retiree who puts in a 30 year career and gets married 9 months before retiring HAS to give full survivor benefits to a spouse who did nothing to contribute to his career. The court made the right call on this one for sure. "Shoulda, Coulda, Woulda, Thought I did" doesn't cut it here. He probably told her he signed her up to keep her from bugging him. Federal retirees are prime targets for gold diggers in their twilight years, especially CSRS, with inflation adjusted annuities and health care, who can blame them.

Re: Survivor Benefits

Fed
Fed Govt
Mon Dec 21, 2009 10:44 AM
IT Spec, I don't think your statement is entirely correct. Your first two sentences start off with essentially the same scenario, but with a different result. The only entitlement to survivor annuity benefits to a spouse comes into play if the death is prior to retirement and if married for at least 9 mos. Other than that, to be eligible for SA, upon retirement, the employee must make the election for a survivor annuity, with the deductions withheld, and a designated beneficiary form on file.

Bend the Rules a Little!!!

Federal Security Officer
Dept of Energy NNSA
Mon Dec 21, 2009 10:40 AM

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My god, give the woman a break. She has had to deal with her husband having Alzheimer's for 10 years during these last years of their life together. My father dealt with my mother having Alzheimer's for 7 years and it drained him mentally and physically. Bend the rules a little and give Mrs. Blood her anuity.

Mr. Blood made a mistake but do not make her suffer for it. Is there any compasion in our government or we in a roll now that we have to be the ones to bail out all these billions being spent on infusion programs that primarily line individuals pockets?

Re: Bend the Rules a Little!!!

Retired
USPS
Mon Dec 21, 2009 8:06 PM
Compassion...he did not elect to cover his new spouse and pay for the survivor deduction as a retiree!

Re: Bend the Rules a Little!!!

HR Spec
Another Federal Agency
Mon Dec 28, 2009 4:25 PM
They were married in 2002. He unfortunately passed away in 2008 with Alzheimer's that had been ongoing for 10 years. Do the Math... He had Alzheimer symptoms approximately 4 years prior to their marriage. She KNEW about his condition(at least within the annuity 2 year window after marriage) and should have asked more questions in order to be better prepared later in life.

Re: Bend the Rules a Little!!!

Analys
DOD
Thu Dec 31, 2009 10:39 AM
Compassion? Yes, but only if you are an illegal immigrant.

Typical

Engineer
EPA
Tue Dec 22, 2009 6:14 AM

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Seems the government says "no" first to anything - especially when it involves money.

Total Comments: 25
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