There are two fantastic features of the Federal Employees Group Life Insurance program that aren’t popular or adequately understood but which can still benefit you in various ways.
First, you can assign your life insurance benefits to another individual or a group of persons. Second is the ability to cash out your Basic insurance when terminally ill. However, both options are mutually exclusive by law, which means you can only elect one and not the other.
Assignment of Benefits
This feature allows you to transfer ownership and control of your Basic insurance, Standard Optional, and Additional Optional insurance to another person(s), corporation, or irrevocable trust. However, you can’t transfer ownership of the insurance if there’s a court-issued decree of divorce, legal separation, or annulment explicitly stating that your FEGLI benefits are to be paid to another person. It’s also important to note that you’ll lose the ability to make changes to your beneficiaries or cancel the insurance when you perform an irrevocable transfer.
Living Benefits
If an individual is terminally ill and has a life expectancy of nine months or less, they may elect a living benefit. This feature accelerates the payment of Basic life insurance benefits to the primary policyholder instead of survivors or beneficiaries.
You can only elect a living benefit once, and it cannot be reversed once done. There’s the option of a full living benefit, which allows you to cash out the entire policy. Alternatively, you can perform a partial living benefit to get part of the policy. With a full benefit, there won’t be a need to continue paying premiums. However, with a partial living benefit, your premiums will be lowered.
Clearly, when you elect a full benefit, your survivors and beneficiaries will not be eligible for any benefit upon your death. On the other hand, a partial living benefit allows you to leave behind a portion of the benefits for those you care about. Also, bear in mind that the dollar value of the remaining part of the policy will be frozen in the case of a partial living benefit, and it will never change, even if your salary increases.
Furthermore, the amount you’ll receive when you elect a living benefit will be lower than the face value of your policy. Since you’re taking the policy ahead of schedule, you won’t get the full interest applicable. However, the amount you receive may be higher than what’s obtainable with a viatical settlement firm since there’s no profit limit.
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Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.
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