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.
408934 US (05/13)
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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)
• Tower Administrative Services (TSA)
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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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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 $1,000 coverage). No further premiums will be withheld after
the calendar month in which the retiree becomes 65.
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•
50% Reduction - Amount of insurance reduces at the rate of 1 % per month
after the later of age 65 or retirement age to a minimum of 50% of your
basic insurance amount at retirement. There is a higher premium charged for
this lesser reduction ($.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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• 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 Tower Administrative Services (TSA), 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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• 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 (power point)
– Guide to Completing a Foresters Life Insurance Application
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FEGLI
• Federal Employees and Foresters
• Step 2
• Currently, Foresters supports business through Tower Administrative
Services, Inc. (TSA). You must call Tower to get access to their website
which contains directions and the required forms. You may call: 1-800-4371670 ext. 3, then 3 again or email: allotment@toweradmin.com to receive
an application to use Tower services or to reach someone in the allotment
department if they have questions on clients or procedures.
• You are required to complete their Application and a Code of Conduct to do
business with Tower.
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FEGLI
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FEGLI
• Federal Employees and Foresters
• Step 2
• Complete their Code of Conduct and Application asking to utilize Tower
services by calling or emailing and requesting an application. The Application
is sent by the Tower’s allotment department.
• The completed Application is faxed or mailed to Tower’s allotment
department. Fax info is on the Application. Approval for you to do business is
processed by the allotment department at Tower. This is an extra security
measure to prevent false registrations.
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FEGLI
• Federal Employees and Foresters
• Step 2
• Upon receipt of the required paperwork (all pages must come back and any
explanations must be sent if needed) Tower will assign you an agent code
specific to Tower only. Along with the Application and Code of Conduct, you
will receive instructions on how to register for Tower’s secure website. There
is a link, shown below, that you can click to begin registration. The email
address you provide on your Application is the email that you will use to
access the Tower secure website for your reports. Tower does not know the
password. If you forget your password, upon request, Tower will send you a
link to reset it.
• https://www.towerinsur.com/Register.aspx.
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FEGLI
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• Federal Employees and Foresters
• Step 2
• Tower will receive notification that you are requesting approval. In order to
complete your registration, you must click the link in your approval email
before you login for the first time (after the first time, you can login from the
normal links contained in every email you receive from Tower). This is to
verify that the email address actually belongs to the person registering with
it.
• Approval usually takes one business day.
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• Federal Employees and Foresters
• Step 2
• Once you’ve logged in you will be able to manage your account by clicking
on the “My Account” button.
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• 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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• 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
• You determine the life insurance contract issue date based on the confirmed
payroll deduction start date from the applicant’s Pay Center and the current
Allotment Cutoff Calendar (made available by the FEB service provider on
their website) and write “Proposed Issue Date of {insert date}” in the top
section of the Foresters life insurance application.
• The preferred issue date must align with the last “run date” of the calendar
month after 3 bi-weekly payroll deductions have occurred.
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FEGLI
• Federal Employees and Foresters
•
•
Step 4
You will need to review the individual FEB service provider pay run schedule
to set the Foresters 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
• For Tower, refer to the “Allotment Cutoff Calendar” which is found on Towers
website – link is as follows.
http://www.toweradmin.com/AllotmentCutoffCalendar.htm. Check this
website for current updates.
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• Federal Employees and Foresters
•
Step 4
• An example, suppose on January 1, 2013 an application for Foresters life
insurance is written. The first bi-weekly payroll for the pay center is January
4, 2013 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 Tower will send the monthly
payment to Foresters. Three monthly deductions would be: January 4,
January 16, February 1st. Tower’s next run date (after February 1st) is
February 7th, hence the application should be future dated no earliest than
February 7th
• Note: Foresters issue dates can only be between 1-28th of the month.
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• Federal Employees and Foresters
•
Step 5
• Agent and Applicant complete Payroll Authorization Form. Each FEB service
provider has their own Payroll Authorization Form that must be completed
and signed by the Applicant. Once completed, the Payroll Authorization Form
is sent directly to the FEB service provider.
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• Federal Employees and Foresters
•
Step 5
•
Tower’s Payroll Authorization Form can be found in the agent’s folder on the
Tower file server. It is called POST/FED B-4 Allotment Authorization. Tower
must receive the Post/FED B-4 Allotment Authorization form to be
able to send premium to be applied to your client’s Foresters life
insurance contract.
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FEGLI
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• 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 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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• Federal Employees and Foresters
•
Step 5
• The allotment and the Administrative fee amount must be added together to
get the correct deduction amount. (See Tower’s Post /FED B-4 Allotment
Authorization form for current Administrative Fee).
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• Federal Employees and Foresters
•
Step 5
• Fax, email and address information is on Tower’s Post/FED B-4 Allotment
Authorization Form (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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• Federal Employees and Foresters
• Step 6
• Agent sends Foresters Life Insurance application and any required forms
directly to Foresters
• Cash with the application is not allowed. First premium will be collected by
payroll deduction and sent to Foresters by the FEB Service Provider
• Foresters cannot accept Tower’s B-4 Allotment Authorization
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• 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). Please see our Government Allotment Guides
for all the details on Federal Employee Business.
• NMO principals may designate Preferred Allotment Producers either by
emailing forestersadmin.com link listed on 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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• 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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• 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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