Federal Retirement Plan Insurance

[yabadabadoo1026]

lady says shes retired from the federal government in Dc and has 200,000 of insurance she has been paying 13-17 / mo on ---she says it varies based on something. I had her call to see if that 200M was going to reduce over time and end at a certain age. She called and they told her NO to both. This is inconceivable to me. Over 20 years she has paid in less than 4000 and will have a 200,000 payout which is seeming guaranteed permanent coverage?????? I know its group term but can this be possible????????------the paid in vs payout looks so out of wack. Can term insurance even group---this must be term---not terminate at an age?????????. Otherwise every retired government employee has seemingly won the lottery

 

[bboman23]

lady says shes retired from the federal government in Dc and has 200,000 of insurance she has been paying 13-17 / mo on ---she says it varies based on something. I had her call to see if that 200M was going to reduce over time and end at a certain age. She called and they told her NO to both. This is inconceivable to me. Over 20 years she has paid in less than 4000 and will have a 200,000 payout which is seeming guaranteed permanent coverage?????? I know its group term but can this be possible????????------the paid in vs payout looks so out of wack. Can term insurance even group---this must be term---not terminate at an age?????????. Otherwise every retired government employee has seemingly won the lottery

Can easily be a term that will start increasing in price. I replaced one today that was $360 per month and fixing to jump to $480. Then jump every year....but it didn't jump at all for the first 10 years.

 

[jdeasy]

lady says shes retired from the federal government in Dc and has 200,000 of insurance she has been paying 13-17 / mo on ---she says it varies based on something. I had her call to see if that 200M was going to reduce over time and end at a certain age. She called and they told her NO to both. This is inconceivable to me. Over 20 years she has paid in less than 4000 and will have a 200,000 payout which is seeming guaranteed permanent coverage?????? I know its group term but can this be possible????????------the paid in vs payout looks so out of wack. Can term insurance even group---this must be term---not terminate at an age?????????. Otherwise every retired government employee has seemingly won the lottery

Could be true? Could not be? Could be peacock? Could be a turkey?

When you deal with the unknown you are just playing a guessing game. See the policy or get on the phone and get the details.

I dealt with one yesterday where the guy said he had $40K with SF paying a little over $100/mo. When we got the real details he had a $10K policy with $3k dividends and PUA's and a $4K loan against it.

Dealt with one a couple weeks ago that the guy didn't have to pay for. It was $40K but had reduced to $20K at age 65 and to $17K at age 70. He is 71 now and figured it was going away at age 75 or 80. This was his story.

We called the HR dept up in Michigan. It was $25K when he retired. It reduced to $21K at age 65 and had not reduced since and it won't. He has $21K for the rest of his life and doesn't have to pay for it. They are sending him a duplicate policy but they faxed the details to me right away.

Now, how did you come to meet with this person? If it was a lead then she had that coverage when she replied. What's her WHY?

 

[yabadabadoo1026]

Jd, had it been an individual policy I would have tried to call but didn't want to navigate and invest the time to figure out where to call the federal government and sit on hold---instead just gave her all he questions to ask letting her do so trying to give her a sense of urgency that her understanding of what she had didn't seem plausible. I normally do the whys but may not have on this or just cant remember

Do you get many legit Whys when folks insist they have a big amount of coverage in their retirement and claiming it won't expire or change--------what would be a ligit Why. On these group plans these folks don't have anything in writing ie policy that confirms their coverage do they----is something in print available or they just relying on what they told verbally??

 

[jdeasy]

Jd, had it been an individual policy I would have tried to call but didn't want to navigate and invest the time to figure out where to call the federal government and sit on hold---instead just gave her all he questions to ask letting her do so trying to give her a sense of urgency that her understanding of what she had didn't seem plausible. I normally do the whys but may not have on this or just cant remember

Do you get many legit Whys when folks insist they have a big amount of coverage in their retirement and claiming it won't expire or change--------what would be a ligit Why. On these group plans these folks don't have anything in writing ie policy that confirms their coverage do they----is something in print available or they just relying on what they told verbally??

It's usually a smokescreen and they aren't interested so I get out of there and move on to someone interested.

If they are interest and engaged then I will help them get the details. If that means getting on the phone and waiting then that's what I do.

Whatever they have there is a record of it. They guy I posted about above I ended up not selling him anything once we found he had a $21K policy for the rest of his life.

I did sell the wife and if there's ever a chance he needs insurance I'm sure he will call me. The next person that has exactly what they told me will be the first. In that case what he told me he had was worse than what he actually has.

That's rare. It's almost always the other way. It still starts with the WHY? Why did you send in the card? Why do you have me here? Without that I'm not checking on anything for them.

 

[yabadabadoo1026]

i will heed your advice on the importance of the WHY and try to get to 100% on it -------------if there is no good answer than the obvious conclusion is they likely thought it was free---why else would they want more than the 200M they insist they have forever with no changes to rate or face

thats got to be a ordeal for the grieving beneficiary to figure out if the departed had any insurance if it through a group retirement with no physical insurance policy being held and navigating thru to get it going---------generally they will be unaware there was that group coverage in place. Prob takes longer to get paid on such as well. Guess all that would be a legit WHY to make them aware of if they dont have a good one of their own

 

[jdeasy]

i will heed your advice on the importance of the WHY and try to get to 100% on it -------------if there is no good answer than the obvious conclusion is they likely thought it was free---why else would they want more than the 200M they insist they have forever with no changes to rate or face

thats got to be a ordeal for the grieving beneficiary to figure out if the departed had any insurance if it through a group retirement with no physical insurance policy being held and navigating thru to get it going---------generally they will be unaware there was that group coverage in place. Prob takes longer to get paid on such as well. Guess all that would be a legit WHY to make them aware of if they dont have a good one of their own

That's usually not a problem if they are drawing benefits too. For example, my Dad was a state trooper for 25 years. he took early retirement at age 52.

He died at age 81. When my step mother called to tell them he passed so they would stop the pension checks they told her he also had a life insurance policy included in his retirement benefits and they would be sending her a check.

But, most of this "unclaimed" money you see advertised on TV that you may have a claim to is life insurance. People died with paid up policies that the family knew nothing about.

A year or so ago a client of mine brought me some old papers that looked like life insurance policies. They were. They were policies her dad had taken out in the 50's. There was 4 or 5 policies, all paid up, ranging in face amounts from $300 to $500. A little less than $2000 total. Of course her dad passed away many years ago and so had her mother whom was the beneficiary.

The company was still in business. We got in touch with them and after much research and getting an attorney involved, {for probate purposes, not to get the company to pay}, the policies were paid to my client and her brother.

She didn't tell me how much she got but it was well over the face amounts.

That's also why the companies have been featured on 60 Minutes several times over the last year or two. The accusations are that the companies are not doing enough to locate the beneficiaries on those unclaimed policies.

 

[AboutThatLife]

Are you a native Spanish speaker? You keep putting 200M when you mean 200K. 200M is something completely different in English.

Government policies do not jump every year. The last time it jumps is at 65. Whether it decreases and by how much it decreases is based on the options they select. When they retire they receive a booklet from OPM that explains their policy with the options chosen.

It is group term that never expire. If she is paying $15-17/month then she has no idea what she has. It's cheap, but its not that cheap. They should almost never get rid of it but add to it.

 

[syntaxninja]

She is probably referring to FEGLI.

"Most employees are eligible for FEGLI coverage. FEGLI provides group term life insurance. As such, it does not build up any cash value or paid-up value. It consists of Basic life insurance coverage and three options. In most cases, if you are a new Federal employee, you are automatically covered by Basic life insurance and your payroll office deducts premiums from your paycheck unless you waive the coverage. In addition to the Basic, there are three forms of Optional insurance you can elect. You must have Basic insurance in order to elect any of the options. Unlike Basic, enrollment in Optional insurance is not automatic -- you must take action to elect the options." -- opm.gov

If someone has added or elected to increase coverage with any of the options and they retire, they can choose to keep the benefit with no reduction or reduce it over time. However, there is an increase in cost (despite what she might think). It goes up every few years and it often makes sense to go to the private market for the optional coverage instead of keeping the benefit the government provides.

FEGLI is pretty sweet, but it starts to get expensive after retirement as the cost begins to increase and can often be beat on the private market.

If you are going to be dealing with Federal Employee's more in the future, I would definitely look into FEGLI a bit further.

 

[AboutThatLife]

IMO for most 65 year olds who have not switched out of it, it is the best they can afford to get.