Overview of Federal Group Life Insurance Program and Retirement Benefits
Jared Gostanczik
National Training Manager
Foresters US
Angela Wethor, JD, CPA
Director of Advanced Markets
Foresters US
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Disclaimers
•
This webinar is not written to be used and it cannot be used for the purpose of avoiding
penalties that may be imposed on a taxpayer. Neither ForestersTM nor its Representatives
engage in rendering legal, business, estate tax, accounting or tax advice. The information in
this seminar is intended as a general overview. Please advise your clients to consult their
individual tax or legal advisors regarding their specific situation. This report is not intended
to provide advice regarding the sale or purchase of specific investments, financial or
insurance products. Circular 230
•
All information is intended to be general in nature. All Foresters fraternal requirements need
to be considered including the requirement that proceeds must benefit the Foresters
member or his or her dependants.
•
The information contained in this presentation is for information purposes only. There are
other tools available to support your learning needs. You must ensure that you correctly
represent, to a customer or prospect, the product features based on the actual wording of
the applicable certificate and riders for your state.
•
ForestersTM is the trade name and a trademark of The Independent Order of Foresters.
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Contents
• Summary of Federal Employee Group Life Insurance (FEGLI)
• Summary of How to submit a Foresters life insurance application as
part of a Federal Employee’s life insurance plan where premiums are
collected and submitted through a Federal Employee Business
Service Provider (FEB Service Provider)
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FEGLI
• What is FEGLI?
• The Federal Employees' Group Life Insurance (FEGLI) Program was
established by the Federal Government on August 29, 1954. The
FEGLI Program protects over 4 million Federal employees and
retirees as well as many of their family members.
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FEGLI
Most Federal 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, a new Federal Employee is automatically covered by Basic life
insurance and their Pay Center deducts premiums from their paycheck unless
they waive the coverage.
In addition to the Basic life insurance coverage, there are three forms of
optional insurance to choose from, however, the employee must have Basic
insurance in order to select any of the options. Enrollment in optional
coverage is not automatic -- they must take action to elect the options.
Please see http://www.opm.gov/insure/life/; Federal Employees Almanac for
updates and further information.
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FEGLI
A Federal Employees Basic Insurance Amount (BIA) is equal to the greater of
(a) their annual basic pay rounded up to the next $1,000 plus $2,000, or (b)
$10,000.*
As part of the Basic life insurance, Federal Employees who are under age 45
get an Extra Benefit at no additional cost. The Extra Benefit doubles the
amount of the life insurance payable if they are age 35 or younger. Beginning
on their 36th birthday, the Extra Benefit decreases 10% each year until, at
age 45, there is no Extra Benefit.
*subject to capped salary amounts
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FEGLI
If a Federal Employee has Basic insurance, they have a choice of three types
of Optional insurance*:
• Option A (standard optional insurance) = $10,000
• Option B (additional optional insurance) = equal to one, two, three, four or
five times their annual basic pay (after rounding up to the next $1,000).
• Option C (family optional insurance) = coverage for the Federal Employees
spouse and eligible children. Federal Employees may elect one, two, three,
four or five multiples of coverage. Each multiple is equal to $5,000 ($25,000
maximum) for their spouse and $2,500 ($12,500 maximum) for each of their
eligible dependent children.
•
*Newly hired employees have 60 days from their entry date to sign up for any optional life insurance.
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FEGLI
The cost of basic coverage is split between the employee and the
Government. The employee will pay two-thirds (2/3) of the total cost and the
Government pays one-third (1/3). Age and gender do not affect the cost of
Basic insurance. Employees pay the full cost of any optional insurance, and
the cost will vary based upon their age and the amount of coverage.
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FEGLI
• The amount of Basic life insurance coverage under FEGLI begins decreasing
at age 65 or retirement, whichever is later, at the rate of 2% per month until
25% of the Basic coverage remains. At this time, premium payments cease.
• Retirees do have options available that can provide more coverage being
available after the age of 65 at a cost. These elections are made at
retirement.
• 75% Reduction - Coverage is reduced by 2 percent a month beginning at
age 65, with an ultimate reduction to 25 percent of the basic policy value.
Retiree must pay the same premium as active employees until age 65 ($.325
per month per $1,000 coverage). No further premiums will be withheld after
the calendar month in which the retiree becomes 65.
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FEGLI
•
50% Reduction - Amount of insurance reduces at the rate of 1 % per month
after the later of age 65 or retirement age to a minimum of 50% of your
basic insurance amount at retirement. There is a higher premium charged for
this lesser reduction ($.965 per month per $1,000 of coverage until age 65
and $.64 a month per $1,000 of coverage thereafter).
• No Reduction - 100% of your Basic coverage is retained after age 65. This
choice resulted in a larger premium being charged. $2.265 per month per
$1,000 for coverage until age 65 and $1.94 per month per $1,000 of
coverage thereafter (no cost for Postal employees).
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FEGLI
• Employees can keep their Basic life insurance (automatically) in retirement if
all of the following conditions are met:
• They had coverage when they retired; They have not converted coverage to
an individual policy;
• Their annuity begins within 30 days, (However if they are retiring under the
Minimum Retirement Age (MRA) plus 10 provision of the Federal Employees
Retirement System (FERS) and they have postponed the commencing date of
their annuity, health and life insurance coverage is suspended until their
annuity begins) and,
• They were insured for life insurance for the five years immediately preceding
retirement or the full periods of service when coverage was available.
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FEGLI
• Employees can keep their Optional life insurance in retirement if all of the
following conditions are met:
• They are eligible to continue their Basic life insurance coverage; and,
• They were covered by optional life insurance for the five years immediately
preceding retirement or the full periods of service when coverage was
available, if less than five years
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FEGLI
• To help a Federal Employee determine what his or her current life insurance
coverage is:
– An online FEGLI benefits calculator is at
www.opm.gov/calculator/worksheet.asp. Active employees unsure of how
much coverage they have should contact their personnel offices.
– They also may check their most recent Standard Form 50, Notification of
Personnel Action, block 27, which shows a code that can be looked up at
www.opm.gov/insure/life/reference/handbook/sf50tbl.asp.
– Retirees should call (888) 767-6738 or e-mail retire@opm.gov.
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FEGLI
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FEGLI
• But for those who need life insurance coverage that will last their life time or
into their retirement?
• What about Federal Employees whose families need more life insurance then
offered through FEGLI?
• Or what about those Federal Employees that don’t qualify to carry life
insurance into retirement?
• Or what if the cost of carrying FEGLI group term insurance into retirement
becomes cost prohibitive?
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FEGLI
• What are allotments?
• Allotment from a federal employee’s benefits means a recurring specified
deduction for a legal purposes from pay, authorized by an employee to be
paid to an allotee. 5 CFR 550.301.
• Voluntary Annuity Allotments are withholdings that can be withheld from
employee’s monthly annuity benefit. Federal and State Tax and Financial
Allotments are examples of Voluntary Annuity Allotments.
• The election to make an allotment or withholding change can be made online
with Services Online.
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FEGLI
• What are allotments?
• A Federal employee is only allowed to have two allotments being paid to
his/her personal account (s) at a financial institution. 56 FR 12837, Mar. 28,
1991.
• One such allotment to a financial institution can be with a financial institution
that has a working relationship with a FEB (Federal Employee Benefit)
Service Provider.
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FEGLI
• What are allotments?
• For those Federal Employees that would like to pay for their Foresters life
insurance premiums through this type of allotment process, Foresters
accepts premiums collected by Transaction Allotment Inc./Professional
Benefits Administrators (TAI/PBA), a FEB Service Provider.
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FEGLI
• What are allotments?
• Federal Employees use various ways to set up allotments with their local
personal service center depending on their employing agency Pay Center.
Some of the ways Employees may set up financial allotments include:
• Employee Express online – www.employeeexpress.gov
• Employee Express by Phone
• Allotment form (1199A) delivered to and processed by local personnel service
center.
• Note: In some cases, the employee will only have one of these allotment
slots filled. There will be times though when both allotment slots will be filled
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FEGLI
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FEGLI
• What are allotments?
• It is advisable each of your Federal Employee clients contact their local
personnel service center to confirm their benefit and allotment procedures.
Employee’s may also use Services Online or call U.S. Office of Personnel
Management to make one-time or recurring membership payments to
organizations.
http://www.opm.gov/retire/annuity/allotments/organizational.asp
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FEGLI
• Federal Employees and Foresters
• Foresters would like to support you as you work with your Federal Employee
clients in determining their life insurance needs. Federal employees buying
individual life insurance may decide to pay the life insurance premiums by
entering into an arrangement with a Federal Employee Benefit (FEB) Service
Provider to have deductions made through the employees Pay Center. When
assisting the employee entering into that arrangement, you are providing
information to the FEB Service Provider and it may provide you with access
to the employee’s information. You and the FEB Service Provider are
responsible for compliance with applicable laws regarding the privacy and
safeguarding of the employee information that is shared under that
arrangement.
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FEGLI
• Federal Employees and Foresters – how to submit business
• Step 1
• Go to: www.forestersfeb.com
• Read all training materials including:
– Producer Guide
– Webinar recording
– How to Submit Foresters business for Federal Employees using an FEB
Service Provider
– Guide to Completing a Foresters Life Insurance Application
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FEGLI
• Federal Employees and Foresters – how to submit business
• Step 2
• You as a Foresters Life Insurance Agent signs an agreement or application
with a Federal Employee Benefit (FEB) Service Provider. (The FEB Service
Providers sending premiums to Foresters may change from time to time or
there may be additional providers available. Please confirm with Foresters
that we support business from the requested FEB Service Provider.)
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FEGLI
• Federal Employees and Foresters – TAI/PBA
• Step 2
• Currently, Foresters supports business through TAI/PBA. You may call
TAI/PBA to receive the Agent Welcome Kit. You may call: 1-800-578-2082
• The Agent Welcome Kit includes:
– 1. Agent Profile Sheet and Producer Agreement
– 2. Contact information
– 3. About TAI/PBA
– 4. All required forms
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FEGLI
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FEGLI
• Federal Employees and Foresters
• Step 2
• Complete the Agent Profile and the Producer Agreement
• Fax or email forms to TAI/PBA
• The fax and email information is found on the forms.
• Upon receipt of he required paperwork, TAI/PBA will email you with your
approval to submit business
• Approval will take approximately one (1) day
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FEGLI
• Federal Employees and Foresters
•
Step 3
• Meet with your prospect clients who work for or have worked for a Federal
Employee agency to discuss their Foresters life insurance needs
• You and the Applicant complete all required Foresters Life Insurance
applications and forms
• Find the Foresters Application for Individual Life Insurance (Federal Employee
or List Bill only) at: https://portal.foresters.biz/
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FEGLI
• Federal Employees and Foresters
•
Step 3
• Applicant completes the Foresters Application for Individual Life Insurance
(Federal Employee or List Bill only) in its entirely (this is a different
Application then Foresters General Application for Life Insurance)
• Please refer to: Guide to Completing a Foresters Life Insurance Application
(FEB and LIST BILL only) 503476 US (05/13) at www.forestersfeb.com
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FEGLI
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FEGLI
• Federal Employees and Foresters
•
Step 3 Key Differences between Foresters General Application for
Insurance and the FEB and LIST Bill Application:
• Addition of FEB/List Bill specific fields (i.e. TPA Service Provider, Preferred
Issue Date, etc.) on first page – THIS INFORMATION IS CRITICAL
• Ordering of sections is different
• Owner section was removed. If the proposed insured is not the owner, the
standard life insurance application must be used
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FEGLI
• Federal Employees and Foresters
•
Step 3 Key Differences between Foresters General Application for
Insurance and the FEB and LIST Bill Application:
• Payment information section was removed
• Financial, Lifestyle and Medical questions now one section called “Questions”
• Juvenile applications are not accepted for FEB/List Bill
• All state variation applications will be 5 pages, even if the 4-page app is
chosen
• An Overflow form (not part of the application package) will be filed with the
FEB/List Bill application to accommodate need for additional space
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FEGLI
• Federal Employees and Foresters
•
Step 3 Key Differences between Foresters General Application for
Insurance and the FEB and LIST Bill Application:
• Cover Page and Producer Report are also updated to reflect FEB and LIST
BILL Business submissions
• As a reminder, no changes were made to underwriting
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FEGLI
• Federal Employees and Foresters
•
•
Step 4
To complete the Foresters Life Insurance Application, you will need to
review the individual FEB service provider pay run schedule to set the
Foresters Proposed Issue Date. You must use the confirmed payroll
deduction start date and count three (3) bi-weekly payroll deductions and
then select the next monthly extract date as the issue date. FEB service
providers do not send the first month premium to Foresters until they have
received three (3) payroll deductions (takes approximately six weeks) from
the Applicant’s personnel service center. If you do not select an appropriate
issue date, Foresters will set a pre-determined date.
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FEGLI
• Federal Employees and Foresters
•
Step 4
• TAI/PBA’s “Allotment Cutoff Calendar” will be sent to you as part of the
Agent Welcome Kit and emailed or faxed if undated.
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FEGLI
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FEGLI
• Federal Employees and Foresters
•
Step 4
• An example, suppose on Oct 17, 2012 an application for Foresters life
insurance is written. The first bi-weekly payroll for the pay center is October
26, 2012 and the first deduction will occur by this date. The issue date will
then be set as follows:
• Requires 3 bi-weekly payroll deductions before TAI/PBA will send the monthly
payment to Foresters. Three monthly deductions would be: October 26,
November 9, November 23rd. The last cut off date for November is
November 29th, 2012 which would be the issue date
• Therefore December 15, 2012 would need to be the Foresters Proposed Issue
Date listed on the Foresters Application for Individual Life Insurance
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FEGLI
• Federal Employees and Foresters
•
Step 5
• Agent and Applicant will need to complete TAI/PBA’s Payroll Authorization
Form
• The TAI/PBA form can be found in the Agent Welcome Kit
• Once completed, the Payroll Authorization form is faxed or emailed to
TAI/PBA
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FEGLI
• Federal Employees and Foresters
•
Step 5
•
The required information on the Payroll Authorization form is critical and
required to start the online allotment process.
• Cash with the application is not allowed. First premium will be collected by
payroll deduction and sent to Foresters by the FEB Service Provider
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FEGLI
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FEGLI
• Federal Employees and Foresters
•
Step 5
•
You and the Applicant must determine the premium deduction with the
Applicant’s Pay Center (confirm the Applicant’s Pay Center with Applicant’s
federal employing agency). To determine the amount, multiply the Foresters
monthly premium by 12 and divide the result by 26. Round up when
necessary.
• Foresters Mobile App allows you to choose “allotment” which will calculate for
you, bi-weekly premiums to help you complete the Payroll Authorization form
• NOTE: You still enter the MONTHLY premium on the Foresters application
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FEGLI
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FEGLI
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FEGLI
• Federal Employees and Foresters
•
Step 5
• The allotment and the Administrative fee amount must be added together to
get the correct deduction amount. (See TAI/PBA/s Payroll Authorization Form
for current Administrative Fee).
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FEGLI
• Federal Employees and Foresters
•
Step 5
• Fax, email and address information is on TAI/PBA’s Payroll Authorization
Form. This form should only be sent by secure methods. It should not be
sent by email unless encrypted.
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FEGLI
• Federal Employees and Foresters
•
POST ISSUE – Change in premium
• Foresters life insurance premium adjusted lower or higher:
• a. Federal Employee is required to contact their Payroll Agency to request
lower or higher payroll deduction;
• b. Federal Employee/Agent need to complete a NEW FEB Service Provider’s
Payroll Authorization Form listing the adjusted bi-weekly payroll deduction
• NOTE: the money being deducted from payroll must match the amount of
TOTAL BI-WEEKLY PAYROLL DEDUCTION listed on the FEB Service Provider’s
Payroll Authorization Form
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FEGLI
• Federal Employees and Foresters
• Step 6
• Agent sends Foresters Life Insurance application and any required forms
directly to Foresters (Reminder, Payroll Authorization Form goes to the FEB
service provider).
• Foresters cannot accept Payroll Authorization Forms.
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FEGLI
• Federal Employees and Foresters
• Preferred Allotment Producer – Advanced Commissions
•
As part of our offering, Foresters has developed an advanced commission
process for Preferred Allotment Producers selling in the Federal Employee
Business Market. For Preferred Allotment Producers, 40% of their First Year
Commissions would be advanced at issue with the balance of the advance
paid upon receipt and processing by Foresters of the first premium (which
may take six to eight weeks).
• NMO principals may designate Preferred Allotment Producers either by
emailing forestersadmin.com
• Find link at: www.forestersfeb.com
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FEGLI
• Federal Employees and Foresters - Preferred Allotment Example
• On Oct 17, 2012 an application for Foresters life insurance is
written. Foresters approves the contract on Oct. 22, 2102. At that time,
Foresters pays 40% of the commission to the Preferred Allotment Agent.
• The first bi-weekly payroll for the pay center is October 26, 2012 and the
first deduction will occur by this date. The Applicant’s pay center will issue a
confirmation when the first deduction will occur.
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FEGLI
• Federal Employees and Foresters - Preferred Allotment Example
• The issue date will be determined as follows:
• Requires 3 bi-weekly payroll deductions to occur before the Pay Center will
send the monthly payment to Foresters. Three monthly deductions will
happen on October 26, November 9, and November 23rd.
• The next run date is December 15, 2012. Note: each FEB Service Provider
has a calendar of run dates. Please check with each individual provider or
contact Foresters for support.
• Issue date would coincide with the next run date. On December 15, 2012
the certificate will be issued and the remaining 60% of their commission will
be paid.
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FEGLI
• Federal Employees and Foresters
• Please see http://www.opm.gov/insure/life/;
• Federal Employees Almanac for updates and further information; and
• Foresters “Overview of Federal Employee Group Life Insurance Program and
Retirement Benefits” for further details.
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Angela Wethor
Director of Advanced Marketing
Foresters US
952 814 5966
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