Kelly Fasterling - Chapter Seven - Life Insurance To Help You While You Are Living !!

Join Host Jeff Roediger and Special Guest Financial Adviser, Kathy Fasterling as we discuss how Life Insurance can be used as a great living benefit.

Kelly and I discuss these important topics:

1.  Why you should "own" life insurance verses "renting" it. 

2.  Using Life Insurance Living Benefits to help cover long term care costs

3.  Leveraging Life Insurance Death Benefits to allow you to spend down other retirement assets

4. Supplemental Retirement Income

and more.....

Transcript

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This conference will now be recorded. Hello, everybody. Welcome back to our next episode with Kelly, faster, lean financial advisor navigate for federal employees nationwide. Welcome back, Kelly. Thank you, Jeff. Thanks for having me here today. Okay, so this session is going to focus on their group benefits, not only while you're working, but when you retire. And I think a lot of times when we do our educational events and retirement sessions, the federal employee, why are we talking about these group benefits? Well, in your practice, as you've explained in previous sessions, it's a very important part of the retirement planning process, correct? Well, there's a big picture here that we have to really handle all angles of retirement. Okay, so let's let's get into another's. There's specific group benefits that you want to help clarify as they're working. And then when they get into retirement, so let's get into it. I think the you know, the dental and vision might be a good place to start, right? Well, let's start up at the health benefits. First, the fHb, which is a federal employees. So while you're employed, you have over 200, carriers to choose from. Now, lots of employees pick Blue Cross Blue Shield, but you have lots and lots of options. And the government is paying roughly 72% of your premium. Now, if you're a postal worker that they pay a bit more, and those premiums that you pay your percentage of that that's pre tax dollars that are paying that premium, okay, and there's an open season, every November and December, then when you retire, to be eligible for carrying fHb, then your federal health benefits into retirement, you need to retire on an immediate first pension, not a deferred fers pension. So you've got to look at that eligibility for retirement to be able to take that immediate first pension. Now the employee needs to be enrolled in fHb for the five years immediately preceding their retirement. Now, the whole family does not need to be on for that five year period. But the family does need to be enrolled before the employee passes or retires. So that fpH B premium really carries the same in retirement, and the federal government in most agencies is still picking up that roughly 72%. But your portion now is going to be paid with after tax money rather than pre tax money. So you'll have just a touch more taxable income. So check with your agency to see if they carry. Now if you 100 options, is that what I heard you say? Tons and tons of options. Yes, yes. Okay. Now that fHb decision, if you cancel fHb, that's an irrevocable decision. So you can't change your mind if you cancel it. So you want to definitely plan for it and really understand it. And in some cases, an employee can suspend a PHP and use a Medicare approved HMO or try care and then later re enroll, but definitely work with somebody that can help you through that. Now, one last consideration if your spouse is on fHb with you, and wants to carry that into retirement, make sure to take the fers survivor benefit so that if you pre deceased, your spouse, your spouse will continue to have those fpH B benefits. So like in the case of Dennis and Nancy dennis is considerably older than Nancy. And he wants to make sure Nancy continues to have epi HB could he pre deceased her? So he needs to select the epi HB survivor benefit to assure that good information. Yes, yes. Lots of decision points. Yes. Okay. So then let's go on the dental and vision. Right, this plan is that's your fed VIP. That's the dental and vision. Now you can keep that plan if you retire also on an immediate pension. And there's no five year rule on that. And you can also enroll after you're retired. So little more options on the dental vision side. Okay. And then fegli, which I don't think In our experience of working with federal employees, I still don't think enough people out there realize how it works and the expense as you get closer to retirement. Yeah, there are parts that start to get real expensive on it. And a lot of folks I talked to you, they signed up for fegli when they signed on, and they've never looked at it since. So it's something definitely to keep up with now. fegli, that's your federal employee Group Life Insurance. And it's, it's basically Group Term Life Insurance. While you're employed. It's not particularly intended for after retirement, but a lot of folks kind of consider how they want to carry it after retirement and what life insurance needs they'll have. So most employees turn on fegli and start fegli. When they start working. There's rarely an open season, the last two were 2004, and 2016. But if you have a qualifying life event, like marriage, divorce, death of a spouse, or birth or adoption, something like that, then you can go readdress your coverage. Now, again, postal workers, they do not pay for the basic fegli, so they're not going to see it on their pay stub. fegli has four basic life insurance options while you're working. The one most people see is that basic insurance, that's your salary, rounded to the nearest 1000, and then have test 2000 added. So if you're making you know, 72,384, it's going to round up to 73. And then with 2000 added your death benefit would be 75. Okay, and so that basic coverage, when you're younger, if you're less than or equal to 35 years old, you basically get two times your salary death benefit. If you're between 36 and 44, it starts to decrement until you hit 45. And then it's one times your salary. But that's real good coverage. Now, there are other options that you can go for option A is increments of 10,000 on the employee. So if you were getting 75,000 of coverage, and you want an 85, or 95, or 105, you could add option A and increment that death benefit. Now, option B that's multiples of your salary from one to five times your salary. And so you can choose that as well, that's the one that starts to get real pricey, once you hit about age 45, it starts doubling in price every five years. So that's one to really keep your eye on because as you get older, there might be some better options if you still need that, that level of coverage. And option C that's where you're insuring spouse, and children. And you're buying again, in multiples on the spouse, you're buying multiples of 5000. So you can buy your 5000 10,000 15,000, etc. and on children, you for all your children, if you have seven children, you know you're covering them all for one price, it's multiples of 2500, you know, up through them being 18 or 22, if they're a full time student. So this just a quite a few options on fegli to consider. So then when they so what are the alternatives that I'm going to get into what so you have somebody let's say they're 55, they have option B as an advisor, what are some of the alternatives that you've looked at and solutions for these for these individuals? Maybe they didn't even realize we're out there? Yeah, there are some some different ideas for them. You know, it depends what kind of insurance they want, whether they want that same term insurance coverage, there are definitely some some less expensive options for the same kind of term coverage. But term coverage is like renting insurance. And at some point, it turns out, you know, 10 1520 years, all of a sudden the price goes up and in the industry, most folks find that they finally let go of their term insurance because it's just too expensive to carry as they get older. So if life insurance is is needed in your plan, because if one spouse passes, the other one's really going to need some extra benefit. Then we want to start looking at some permanent insurance options and there are some real good choices with with either guaranteed life survivor universal life things that will make sure that you will have that death benefit available for whoever needs it in a cost effective way over time now usually that permanent insurance is a bit more expensive upfront but when it plays out over the years it is not the only way really to ensure that somebody your spouse or children are going to get that death benefit okay so this this kind of leads into the topic for next week but there are some life insurance products out there that all that will include long term care options or provisions correct there are some and so you really need to take a look at that because as you look at retiring and you look at that eligibility for retiring if you're enrolled in your your basic for five years before retiring then you're eligible to take it you have an option with your fegli to keep the coverage you have to reduce it take a 50% reduction or a 75% reduction now what you've got to keep in mind is that you paid for say basic all these years that 75% reduction is free so this is a really good deal now you've got to make sure that by the time you have you're making 100,000 and your death benefits reduced down to 25,000 that's that's going to carry you the way you want it to carry then you have the same options for that reduction on options a and b with c it's either you take it full or no reduction kind of thing so okay looking at that that coverage is very important and you really need to factor it into your plan and how your plan is going to play out especially should one spouse predeceased the other spouse that's important information okay so let's talk about next next session what are we going to be i know we mentioned the long term care long term care and then we also want to touch on the special retirement supplement for folks that are retiring before they're 62 how do they qualify for that and what does it look like how is it going to carry them way and then there's some mandatory employees that are forced into retirement right there are some of those special provision employees special provision so okay so we're going to get into that next session great information kelly thank you for sharing today you are welcome and so somebody out there listening then how do they get ahold of you what's the best way to contact your team yeah the best way is through our 800 number so 88854 or 58840 extension 704 to get directly to my team let me repeat that it's 888-545-8840 extension 700 and you can also send kelly an email at kelly with a y k e ll y at gov resource calm and for additional information on your benefits education the 12 must answer questions each of you need to address before retiring go to fed checklist.com fed checklist calm you and you can also post questions or comments for kelly but let us know you attended this session we'll get them over to her and we'll be back for our next session so great information today thank you very much appreciate your time kelly no busy you are thank you this wraps up our session today look for the next episode to be uploaded soon and we'll talk to everybody within the next week thank you