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

409065 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.

409065 US (05/13) For Producer Use Only

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)

409065US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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

409065US (05/13) For Producer Use Only

FEGLIIf 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.

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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).

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (05/13) For Producer Use Only

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?

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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.  

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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.)

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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/

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (11/12) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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.   

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (05/13) For Producer Use Only

FEGLI

409065 US (05/13) For Producer Use Only

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).

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

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.

409065 US (05/13) For Producer Use Only

Angela WethorDirector of Advanced Marketing Foresters US952 814 5966

409065 US (05/13) For Producer Use Only