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Should You Elect a Survivor Benefit for Your Spouse?

Cancer Survivor

Career LR
Anywhere and Everywhere
Thu Jan 14, 2010 7:27 AM

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I had a financial advisor show me how it might be advantageous to take out a significant life insurance policy because the rates would be less than paying for survivor benefit.

Downside is you have to have good health and if you get term, you may outlive the term.

Also, if you are a cancer survivor, as am I, you are uninsurable, so that is not an option. Survivor benefit is the ONLY option in such a case.

Re: Cancer Survivor

Don Vito Corleone
Genco Pura Olive Oil Importers
Thu Jan 14, 2010 8:03 AM
You are forgeting one little thing. Your insurance company must be able to pay at the time of your death. Remember AIG

Re: Cancer Survivor

Accountant, retired, GS 14
DOE
Thu Jan 14, 2010 11:39 AM
Whatever you dicide your spouse has to agree not to elect a survivors annuity or you sol. It's like an abortion or preganacy. husbands have no say, just pay..lol

Re: Cancer Survivor

Human Resources Specialist
DA
Tue Jan 19, 2010 12:10 PM
In the second table, the reduced base is correctly reflected as the amount used to compute the cost, but the cost should then be deducted from the full annuity, in this case the $45K; with $3,230 taken out for the benefit, the reducted annuity would be $41,770, not $31,770.

Answer

Program Analyst
FAA
Thu Jan 14, 2010 8:35 AM

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So, "Should You Elect a Survivor Benefit for Your Spouse?"

John it would be really helpful if you could provide some answer to the premise of the article. Some scenario of age differences, life insurance, savings, etc that we may draw a conclusion with.

You have proposed a good question, and, left us with the same.

Re: Answer

hr
dod agency
Thu Jan 14, 2010 9:07 AM
I am not sure it is fair to expect someone to give a definitive answer to the question about a survivor's annuity as there are so many different situations. I noticed the editor put a couple of columns up under the headline about court decisions involving a survivor's annuity. There are so many possible scenarios the best one could hope for is an explanation of the financial considerations--the emotional ones, in the complex life situations we create, you will have to make for yourself!

You pays your money...

Retired Fed
None
Thu Jan 14, 2010 9:05 AM

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A survivors annuity is a form of life insurance. If your annuity is reduced $5000 a year, that is the annual premium. Unlike most life insurance, the benefit grows over the years with the premium not adjusted for age. All life insurance is betting against your death. As one ages, and the actuarial table shortens, the bet becomes more sure. Life insurance is generally adjusted, either the premium or benefit, to compensate for the growing risk of a payout each year. My wife’s genes are better than mine. As we age, I cannot afford to buy enough insurance to replace the loss of the CSRS survivors annuity income, which is the primary purpose of life insurance, given the liklihood of her surviving me. Socking away the money is no sure thing, either, even buying gold. Like any other “bet”, you pays your money, you takes your chances.

Mistake on Table 2

Research Forester
USDA Forest Service
Thu Jan 14, 2010 9:12 AM

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Line 3, Table 2: It should read 10% of $31,400 not 10% of $41,400

Both Spouses FERS

Project Coordinator
DOD
Thu Jan 14, 2010 9:27 AM

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So how would the survivor benefit work if both husband and wife retired under FERS? I'm assuming there are no special rules, exceptions, penalties, etc in this situation.

FEHB

Retired Mgr
FAA
Thu Jan 14, 2010 9:33 AM

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It is important to note that you must select a survivor annuity in order to maintain FEHB coverage. The cost of private insurance is increasingly prohibitive.

I don't recall where, but I once read that if the spouse precedes the annuitant in death, then the annuitant can have the annuity recalculated to the full amount. Does anyone know that to be true?

Re: FEHB

Career LR
Anywhere and Everywhere
Thu Jan 14, 2010 9:50 AM
It is my understanding that, yes, if the survivor who was to benefit expires first, the annuitant can have it recalculated to full benefit.

Yes, it is also true that if one does not provide for the survivor's benefit, there is no FEHB health coverage. You can also have a "reduced" percentage of survivor annuity and the survivor would be able to have FEHB.

But if Obama has his way, I am calculating that "womb to tomb" health coverage will eliminate all these risks...like why bother with long term care insurance too.

And I also believe in the tooth fairy.

Re: FEHB

Aviation Safety Inspector
FAA
Thu Jan 14, 2010 10:32 AM
You are correct. Per FERS retirement handbook, Section Section 52B2.1-2, paragraph B: Any reduction in an annuity to provide a current spouse survivor annuity will terminate on the first day of the month after the current spouse dies.

Re: FEHB

worker
Fed
Sun Jan 17, 2010 5:48 PM
To Career LR,
Long term care and health insurance are almost totally separate. Health insurance covers sickness. Long term care covers disabilities leading you not to be able to take care of yourself over an extended period of time. For the most part medical insurance will not cover the latter. Thus you will spend down your assets before going into a home that accepts medicaid.
I will keep my long term care policy.
Note also that the health plan in question is for those who do not have health insurance. It is not for the ofrtunate people like us who have health insurance.
I know you do not like Obama, but that is not relevant in this area.

Retired Military Husband, Retired CSRS Wife

Project Coordinator
DOD
Thu Jan 14, 2010 9:36 AM

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A little off topic here but looking for POC to verify following. My dad retired from USMC and elected survivor benefit for my mother. She retired 2 years later on CSRS. He was told several years ago that, in the event of his death, she cannot receive the survivor benefits he has paid into for the last 32 years because she is receiving a federal pension. Adding insult to injury he was also told that he could not cancel the survivor benefit selection even though she could never receive it. That's a lot of money down the drain over that much time. Surely they were given bad info because this makes no sense at all.

Re: Retired Military Husband, Retired CSRS Wife

worker
Fed
Sun Jan 17, 2010 5:50 PM
I have no expertise in this area. Who told him this. It makes no sense to me, but I have no expertise. Talk to someone with knowledge in the area.
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