\ Helping to Understand FEGLI Federal Group Life Insurance

Transcription

1 \ Helping to Understand FEGLI Federal Group Life Insurance Michael Nakashima, CFP Certified Financial Planner with Transamerica Financial Advisors, Inc. Chartered Federal Employee Benefits Consultant (ChFEBC) Lauren Brown Financial Planner with Transamerica Financial Advisors, Inc.

2 Disclaimer Michael Nakashima is a financial planner that works almost exclusively with federal employees and their spouses. The information contained in this presentation has been researched on the websites of the Office of Personnel Management ( the Thrift Savings Plan ( and through the other related sources. The Federal Government does not favor, endorse, or recommend any commercial company, supplier, product, Innovate Financial, Inc., or Michael Nakashima. Michael Nakashima is an Investment Advisor Representatives offering securities and investment advisory services through Transamerica Financial Advisors, Inc. (TFA) Member FINRA & SIPC and Registered Investment Advisor. Non-securities products or services are not offered through TFA. TFA and its representatives do not give tax or legal advice. This material is provided for informational purposes only and should not be construed as tax or legal advise. Clients and other interested parties must consult with and rely solely on their own independent advisors regarding their particular situation and the concepts presented here. Transamerica Financial Advisors, inc. is not responsible for the validity, completeness, or accuracy of any information provided in this presentation. TFA and Innovate Financial, Inc. are not affiliated.

3 About the speaker Mike Nakashima lives in Minneapolis with his wife, Kelly, and their three children (Adilyn, Emma and Theodore). He is originally from Dubuque, IA and is a graduate of the University of Iowa. Mike is a Financial Planner and a Chartered Federal Employee Benefits Specialist (ChFEBC). Mike helps federal employees with their investments, retirement planning, life insurance, and long term care insurance. He has been in the financial services industry since He has worked for TD Ameritrade, Jackson National Life, Transamerica Financial Advisors, J.A. Counter & Associates, and is owner of Innovate Financial, Inc. Michael Nakashima is a registered representative and investment advisor representative offering securities and investment advice through Transamerica Financial Advisors, Inc., a registered Broker/Dealer and investment advisor, Member FINRA. Contact Information Innovate Financial, Inc. Attn: Mike Nakashima 6701 Penn Ave. Ste 200 Richfield, MN Ph: (612) Fax: (612) mnakashima@tfamail.com Website

4 Federal Employee Group Life Insurance (FEGLI)

5 FEGLI Life Insurance Overview Must have Basic FEGLI Insurance to apply for Option A, Option B, or Option C Available without underwriting at initial employment. Some coverage can be applied at anytime, while employed, if willing to go through underwriting (medical requirements). Insurance provided and underwritten by Metlife Life Insurance Company.

6 Basic Life Insurance 2015 Innovate Financial, Inc. Basic Life Insurance is equal to: 1X Your Salary, Rounded Up, and Add $2000 Employees Pay $0.15 Per $1000 Biweekly Retirees Pay Retirees 75% Reduction 50% Reduction No Reduction Until the Month after your 65 th Birthday Starting the Month after your 65 th Birthday $0.325 monthly per $1000 Free $0.925 monthly per $1000 $0.60 monthly* per $1000 $2.155 monthly per $1000 $1.83 monthly* per $1000 * You will continue to pay premiums for life (unless you cancel or subsequently elect 75% Reduction). Source for all FEGLI Rate Information:

7 Basic Life Insurance Example 2015 Innovate Financial, Inc. Basic FEGLI Death Benefit: $50,000 Employed Retiree Current Premium $195 Annually No Reduction $50,000 Death Benefit for Life Annual Premium: $1293 Retirement to Age 65 Annual Premium: $1098 Post Age 65 50% Reduction Death Benefit is Level until Age 65 when the Death Benefit drops by 1% a month until you have 50% of Basic Death Benefit at Retirement. Annual Premium: $555 until Age 65 $360 Annually After Age 65 75% Reduction Death Benefit is Level until Age 65 when the Death Benefit reduces by 2% a month until you have 25% of your Basic Death Benefit at Retirement. Annual Premium: $195 until Age 65. $0 After Age 65 Joe 57 Years Old Salary: $47,999 Retiring this year Deciding what to do with his BASIC FEGLI

8 Extra Benefit 2015 Innovate Financial, Inc. Example Must have the Basic FEGLI. Extra Benefit doubles the Basic FEGLI death benefit for people under age 35. At age 36 it starts to reduce by 10% a year until age 45 when there is no Extra Benefit. Age 34 Salary: $47,500 Basic FEGLI: $50,000 Under Age 35 Extra Benefit: $50,000 Total Death Benefit to Age 35: $100,000 Age 36: $95,000 Age 37: $90,000 Age 38: $85,000 Age 39: $80,000 Age 40: $75,000 Age 41: $70,000 Age 42: $65,000 Age 43: $60,000 Age 44: $55,000 Age 45: $50,000

9 Part A FEGLI Insurance $10,000 of Life Insurance No price increase for Retirees At age 65 automatically reduces by 2% a month until age 70 when you will have $2500 No premiums due after age 65 Age Group Biweekly Monthly Annual Premium Under 35 $0.30 $0.65 $ $0.40 $0.87 $ $0.60 $1.30 $ $0.90 $1.95 $ $1.40 $3.03 $36.40 If you have Basic the extra cost for Option A is miniscule $2.70 $5.85 $ $6.00 $13.00 $ $0 $0 No Charge Source for all FEGLI Rate Information:

10 Age Group Part B Life Insurance 1 to 5 Times Your Salary Biweekly Monthly, per $1,000 Under 35 $0.03 $ $0.04 $ $0.06 $ $0.09 $ $0.14 $ $0.28 $ $0.60 $ $0.72 $ $1.20 $ $1.80 $ and over $2.40 $5.20 Part B will have no premiums due after age 65 if you take a 100% Reduction of Part B at retirement. Reduces by 2% a month for 50 Months until it is worth $0. Rates May Change in the Future Source:

11 Part B Life Insurance Example Dave: Age 30 Salary: $50,000 (all years for example) He has 5X Option B for $250,000 in Death Benefit. Age Group Biweekly Annual Premium Under 35 $7.50 $ $10 $ $15 $ $22.50 $ $35 $ $70 $ $150 $ $180 $ $300 $ $450 $11, and over $600 $15,600 Part B is designed so that you have few choices but to cancel it if you live a long life.

12 Increasing cost of FEGLI Part B

13 Part C Life Insurance Sold in 1 to 5 Multiples Employee's Age Group Biweekly Monthly, per multiple $2,500 up to $12,500 per child $5,000 up to $25,000 on spouse Example: 5X Part C on Spouse Death Benefit: $25,000 Fed Age 65-69: $390 Annually Fed Age 70-74: $442 Annually Fed Age 75-79: $585 Annually Fed Age 80+: $780 Annually Special Consideration: The Part C is very well priced while the Federal Employee is alive. If the Fed Employee (retired or not) predeceases the spouse, or covered children, the Part C will have to be converted to Whole Life and the price will go up. The conversion does not require proof of health if done on time and the spouse/covered children will have to weigh the benefits of keeping the insurance, replacing it, or cancelling it. Under 35 $0.27 $ $0.34 $ $0.46 $ $0.60 $ $0.90 $ $1.45 $ $2.60 $ $3.00 $ $3.40 $ $4.50 $ and over $6.00 $13.00

14 5X Part C Illustrated

15 Federal Employee Group Life Insurance (FEGLI) If you are replacing any life insurance coverage you should never drop your current coverage until the new coverage is in force and paid. In my opinion, the Basic option for FEGLI is a good deal. You should consult with a professional about whether the No Reduction, 50% Reduction or 75% Reduction is best for you when you retire. It s my opinion that you should never completely drop the Basic FEGLI. The value of the rest of the Federal Employee Group Life Insurance options (Option A, Option B and Option C) depend on your age and health. It is advised that you meet with a professional who understands your federal benefits to ascertain the value of Option A, Option B and Option C for your situation. All options in FEGLI can be valuable and careful consideration should be made before making any changes.

16 Questions and Answers About Life Insurance

17 Thank you for attending this training session today. For more information about Mike Nakashima please visit our website at or phone us at (612) Our website has this training manual available for printing and upcoming federal benefit web training events and other retirement planning information. Adilyn & Emma s 1 st Day of Preschool

18 Resources 2015 Innovate Financial, Inc. Innovate Financial, Inc & Michael Nakashima Financial Updates, News, Calculators Life Insurance Calculators Financial Industry National Regulatory Authority (FINRA) Office of Personnel Management & FEGLI Thrift Savings Plan Federal Long Term Care Insurance Program Vision Plan Dental Plan Contact Innovate Financial, Inc. for additional information about our services: (612) This power point presentation offers links that operate outside Innovate Financial, Inc., is not responsible for the validity, completeness, or accuracy of any information provided on those sites.