overview of federal group life insurance program and retirement benefits jared gostanczikangela...

Overview of Federal Group Life Insurance Program and Retirement Benefits

Jared Gostanczik Angela Wethor, JD, CPANational Training Manager Director of Advanced MarketsForesters US Foresters US

408934 US (05/13) For Producer Use Only

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.


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)


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.


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.


http://www.opm.gov/insure/life/

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


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.


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.


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.


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).


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.


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


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 [email protected].


http://www.opm.gov/calculator/worksheet.asp

http://www.opm.gov/insure/life/reference/handbook/sf50tbl.asp

mailto:[email protected]

FEGLI


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?


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.


FEGLI


• 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.


FEGLI


• 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.


FEGLI


• 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


FEGLI


FEGLI


• 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


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.


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


FEGLI


• 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: 1-800-437-1670 ext. 3, then 3 again or email:

[email protected] 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.


FEGLI


FEGLI


• 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.


FEGLI


• 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.


FEGLI


FEGLI


• 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.


FEGLI


• Step 2

• Once you’ve logged in you will be able to manage your account by clicking on

the “My Account” button.


FEGLI


FEGLI


• 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/


FEGLI


• 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


FEGLI


FEGLI


• 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


FEGLI• Federal Employees and Foresters



• 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


FEGLI




• 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


FEGLI


• 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.


FEGLI


• 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.


FEGLI


• 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.


FEGLI


FEGLI• 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 7 th

• Note: Foresters issue dates can only be between 1-28th of the month.


FEGLI


• 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.


FEGLI


• 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.


FEGLI


FEGLI


• 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


FEGLI


FEGLI


• 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).


FEGLI


• 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.


FEGLI


• 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


FEGLI


• 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


FEGLI


• 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


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.


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.


FEGLI


• 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


Angela WethorDirector of Advanced Marketing Foresters US952 814 5966


overview of federal group life insurance program and retirement benefits jared gostanczikangela...

Documents

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