Page 46 - The Informed Fed--Hearn Wealth Management
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on their annual Statement of Benefits, though it does not appear on the
paystub.
Basic Life Insurance Coverage
As we mentioned, postal workers get this coverage at no charge. All
other branches pay $0.15 per $1,000 of coverage. Basic Coverage is
calculated using your Base Pay. You can calculate your Basic Coverage
by taking your Base Pay - round it up to the next thousand, add $2,000
and that equals Total Basic Coverage. Consider this simple example. Bob
has a base pay of $45,300. His Basic Coverage would be: $45,300 (Base
Pay) $46,000 (Rounded Up) + $2,000 equaling $48,000 which is his Total
Basic Coverage. As you get pay raises and COLAs, your Basic Coverage
will also increase. You use the exact same calculation, with your new base
pay after each raise. Your Final Expense Benefit and your Basic Life
Insurance includes a little-known and seldom-claimed final expense
benefit. If you retire prior to age 65, your Basic Life Insurance will remain
in effect until age 65. For the next 38 months, it will reduce by 2% each
month until the benefit reaches 25% of the original amount. Example:
If Bob earns $52,000 at retirement, his Basic Insurance coverage is
$54,000 until age 65. Over the next 3 years and 2 months, his coverage
will reduce each month until it reaches $13,500 (25%). Most federal
employees are not aware of the fact that this coverage stays in effect for
life. Because most employees and their beneficiaries are unaware of this
final expense benefit, it goes unclaimed in many cases. To take advantage
of this added benefit, inform your executor and your beneficiaries of this
information. Put a note with your will, final papers and insurance
documents. Beneficiaries should call the Retirement Information Office
at 1-888-767-6738 for assistance.
Extra Benefit--Your Basic Coverage has an additional feature called
the Extra Benefit. The Extra Benefit is basically a bonus on your Basic
Coverage for being under the age of 45. Employees who are under the
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