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F.A.Q.'s

19 Frequently Asked Questions

By James Tobin, CFP ®

Below are brief  answers to 19 of the most common questions asked about life insurance. For more in-depth  discussion of the questions below,  feel free to  reach out to us by email or telephone. 

What is Bequest Mutual Life Insurance?

Bequest Mutual Life Insurance is an private independent agency designed to offer both an alternative to employer sponsored group life insurance and a seamless process for the philanthropy minded to leave a bequest to their favorite  charity. Bequestmutual.com is not affiliated with the United States government, and is not a United States government agency.

The owner/operator  and lead agent for bequestmutual.com is  Certified Financial Planner, James P. Tobin .  See licence Information.        

What is the SmartGLIX comparative calculator? 

TheBequest Mutual comparative calculator is a useful tool to visually see the current and future cost associated with employer sponsored plans including FEGLI Option B. The tool allows for you to print a .pdf of the output if you are not ready to act immediately.

What Is FEGLI?

The  Federal Employees’ Group Life Insurance (FEGLI) Program was established by the United States Government in  August of  1954.

With 2.1 million civilian federal employees according to the Office of Personnel Management (OPM), it is  among the the largest group life insurance plans in the world.

FEGLI  provides group term life insurance. It consists of Basic life insurance coverage and three supplemental options.

Unless coverage is declined by the employee, new federal employees  are automatically covered by basic life insurance with premiums payroll deducted. 

Basic

Basic life insurance coverage under FEGLI is equal to one year of base pay rounded up to the next thousand, plus $2000. This group life benefit is provided with no medical exam and is subsidized 33% by the government (100% in the case of postal employees).

The basic benefit, not tied to the insured’s age or health, is currently priced at .15 per thousand of coverage each pay period. Additionally, the basic plan is supplemented free of charge starting at age thirty five with a ten percent (10%) increase in benefit each year until age 45. The supplemental benefit is removed at age 45. 

In addition to the basic coverage , there are three options to supplement coverage.

Option A

Option A of the federal employee group life insurance plan provides $10,000 of protection. This coverage is a well priced benefit  and barring unusual circumstance should be kept in force. 

Option B

Option B of the federal employee group life insurance plan offers up to 5x your basic salary. The cost of this insurance plan increases in five year increments. The incremental increases are significant after age 45. Beyond the age of 50, option B becomes prohibitively expensive and it is worth comparing with FEGLI2TERM’s no exam options for significant savings.

Option C

Option C provides life insurance for your spouse and eligible dependent children. When you elect Option C coverage, all of your eligible family members are automatically covered.

You may up to 5 multiples of coverage with each multiple  equal to $5,000.00 for your spouse, and $2,500.00 for each of your eligible dependent children. As the insured enrollee, receive the life insurance payment when an eligible family member dies.

The cost for Option C insurance remains the same regardless of the number of eligible dependent children. Dependent children must be unmarried and under age 22, or if 22 or older, incapable of self-support.  The cost of Option C insurance depends on your age, and the number of multiples you elect. When you have a birthday that moves you to another age group, you will begin paying the premiums for the new age group in the first pay period that starts after your birthday.

 Resource: https://www.opm.gov/healthcare-insurance/life-insurance/reference-materials/federalbooklet.pdf

What do alternatives cost?

Unlike group life insurance, the cost of individually owned private market life insurance has has many contributing factors. Chief among them are age and health, with length of term, carrier and riders also playing a significant role. These issues can work for or against you depending on your situation. For example, folks with particularly poor health are often better off sticking with employer group plans. However, most people in average or better health will see a substantial savings over employer sponsored plans.  This multitude of contributing factors is  a major rationale  to use an independent broker like BEQUESTMUTUAL.com. To get an idea of cost, you can use the free quote tool.  

 

What Is the application process?

The application process is an eight step process that involves choosing terms, getting pricing,  picking a quote, submitting an application, possibly taking an exam, awaiting underwriting, getting an offer, and taking delivery. The good news is that the applying portion can often be done in less than a half hour.

Do I need to take a medical exam?

Most cases will have  a guaranteed "no exam" option"  However, depending on our age (over 69),  and the amount of coverage desired (over 1MM),  a para medical exam may be required.

How long will underwriting take?

The time range to underwrite a policy depends on the carrier, the type of underwriting being done (no exam or fully underwritten), and if medical records will need to be ordered. While most applicants will be offered a "no exam" choice at no additional premium, the issue of medical records is case by case. Older applicant's and those with health concerns are more likely to have medical records requested. 

If no medical records are requested, the process is usually complete in 10-14 days. If medical records are required it can take upwards of 6 weeks. As the applicant you can help speed this process by contacting your medical provider and requesting that your medical records be expedited. The reality is that doctor's offices are not compensated much to provide these records and the "squeaky wheel gets the oil".


 

Will my driving history matter?

Possibly, yes.  Your motor vehicle record or MVR report is pulled by underwriters and if you have multiple tickets for moving violations in  the most recent 2 years , or a history that includes serious infractions like DWI/DUI or a suspended licence, it will likely have an adverse affect on your health classification. That said, the longer ago the issue , the better off you will be. Generally after 5 years, 1 DUI/suspended licence will have no affect.

What about SCUBA diving or other risky activities?

All hazardous activities whether SCUBA, rock climbing, or a dangerous job  have the possibility of affecting your rates. These are situations where it is important to provide as much detail about the risk as possible to your agent. It is then possible to gauge the different carriers appetite's for the risk involved.  

How long do I need to have quit smoking to be considered a "non smoker"?

It depends on the carrier. However to be eligible for the best rates (preferred plus) it is often 5 years.  However most carriers will consider you a non smoker and eligible for standard/standard plus rates after 12-24 months.  There are  lenient non-smoker guidelines for occasional cigar and marijuana users.

What are the best life insurance carriers?

Because different carriers have different risk appetites, the carrier that is best for you may not be the best for your spouse. Nonetheless, Bequestmutual.com has assembled a group of carriers that offer no exam options and tend to be more forgiving of  health concerns, If you have a specific health concern that you'd like us to look at for you , you can either use the custom quote form or contact us.  

Is there a cost break if I pay annually?

Yes there is. The price break usually represents about a 4-5% savings on the annual premium. The exact savings will vary from carrier to carrier. The quote tool  will show both a monthly and annual payment.

What are living benefits?

All policies now have some ability for terminally ill policy owners to access a portion of the death benefit prior to death. Many policies go far beyond the legal requirement and offer partial benefit payments for chronic illness and critical illness. Terms vary from carrier to carrier. If owning a policy with living benefits is a priority for you,contact us and we will make sure that the quote you receive is with a carrier that offers a strong living benefit option.         

How long before a beneficiary is paid out?

If the policy is more than 2 years old and there is no reason to believe there were material misstatements in the application, the policy should pay out in under a week. If the policy is within the 2 year contestable period, the carrier may do a brief investigation that will delay payout by a month or more. 

Can I change the beneficiary?

Yes. As  the policy owner you have the sole authority designate and change beneficiaries. This power may be restricted if the policy is court ordered as part of a divorce settlement or is being used as collateral for a loan.

Can I sell or gift the policy?

As the owner of the policy, you have the right to sell or gift the policy.  Consult with your tax advisor before transferring any ownership as there may be tax implications. The ability to sell or gift the policy may be restricted if the policy is court ordered as part of a divorce settlement or is being used as collateral for a loan.

Is there any cash accumulation in the policy?

Term policies do not accumulate cash value.

Cash accumulation policies , like whole life and universal life, are not offered through FEGLI2TERM.com.

If you are interested in a cash accumulation  permanent policy  contact us and we match you with an experienced agent specializing in permanent policies.

Should I just bundle my life insurance with my home and auto?

While it is tempting to have all your insurance "under on roof", it is seldom a good idea. Unlike home and auto, there are no direct "discounts" available on life insurance allowed by law. By bundling you are stuck with whatever is offered by your home and auto carrier. This offering may or may not require a medical exam.

Moreover, competition is essential to finding the best price. If you have health issues, you want to be able to shop the carrier who has the biggest appetite for insuring your unique situation.

Why use a broker instead of going straight to the insurance company?

The reason to use an independent broker is that is simply gives you the best chance to find the policy that works best for your unique situation. As opposed to only having the option of the carrier who an agent works for, an independent can look for better rates,  and most important (if your health is not perfect), the carrier who is most lenient in underwriting your health condition.

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