Protecting Your Children Financially after Death

For parents, one of the biggest concerns in life is passing away and not having the appropriate structure in place to support children. Fortunately, through continued health benefits coverage and survivor annuities, the federal government has taken steps to make this easier. What’s more, there’s always the option of life insurance payments.

Federal Employee Health Benefits

As long as you aren’t on the ‘self-only’ coverage plan, all family members you leave behind after death will still be enrolled as long as you’re enrolled in the FEHB program as you pass; this is only true if one family member receives a survivor annuity. We should note that the enrollment will adjust to a self-only type of coverage when there’s only one survivor annuitant eligible for coverage.

Under a surviving parent’s FEHB plan, your child should be protected right up until 26 years of age. Where no surviving parents are found, the coverage will normally end alongside the annuity (18, for most). However, this doesn’t mean they’ll be on their own because they have options; they can either go for TCC (temporary continuation of coverage) or convert to a lower-benefit individual policy. While the TCC will have FEHB-type benefits, it only lasts for 36 months. Furthermore, while your child will bear the full cost, a TCC comes with admin expenses of 2%.

Federal Employee Group Life Insurance

What if you’re covered under FEGLI? In this case, the surviving spouse normally receives the death benefit. Where no spouse is found, it will go to the beneficiary you chose while setting up the policy. If you haven’t taken this step, the money will follow a ‘standard order of precedence’ which means your children will be first in line.

Below, we’ve listed the standard order of precedence alongside advice on how the money is split (if required). If the policyholder doesn’t designate a beneficiary for the money, this is the order in which it will be given after death;

  • Spouse/widow
  • Child/children – shared equally, the descendants of a deceased child (if any) will receive his/her share
  • Parents – either split between the two or in full to a surviving parent
  • A duly appointed administrator or executor of your estate
  • Your next of kin

If none of the first four are found, the money will reach whoever your next of kin was at the time of death. Furthermore, you should be aware that this order is disregarded if a court is issued a decree of annulment, divorce, or legal separation where the benefits are expected to be paid to another party entirely.

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