Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Welcome to Reyna Retirement. Reyna Reyes has dedicated her career to helping people make smarter financial decisions. Reyna Retirement is all about breaking down complex financial concepts into language you can actually understand.
Now here's the co founder of American Federal Benefits Consultants, Reyna Reyes.
[00:00:39] Speaker B: Well, I think we all remember that papa was a rolling stone. Wherever he laid his hat was his home. And when he died, all he left us was a loan.
That's not what you want to do. If you're a federal employee and you have basic life insurance, you've got access to some coverage and that will be forever.
Forever. So you can be a rolling stone and actually leave something behind that's more than a loan, right? Maybe it'll pay off the loan, maybe you won't. Maybe put a dent in the loan. Maybe it'll cover the burial. I don't know. What you need to know is that today your fegli basic life insurance is one year of your salary. So let's say I make 100 grand. $100,000 to cover it. Of a of salary. $100,000 a year. If I pass away while I'm in service, how much does my family get? $100,000. And how much tax do they pay? They don't. Because life insurance is not a taxable event to the beneficiary. If you've ever seen me ever, you know this already. You're like Raina old news. Duh. Got it. So what happens to fegly basic? What if I get sick? What if I get super sick, right? Well, it depends on how super sick I am.
There was a t a law passed back in the 90s called the living Benefits act. And that says if you get diagnosed with something that's going to be terminal within nine months. Nine months or less to live. You can call it in. Hey guys, I have a terminal illness. I need you to pay me all of my basic life insurance.
All of it, minus 4ish percent. They cover some of the thing, but who cares? So that's a detail. But the thing is you get your life insurance lump sum tax free when you have a terminal illness of nine months or less to live. Now what if I just get diagnosed with cancer? Reena, just. Come on. Just. Really? Yeah. What if it's just Cancer or just a heart attack or just a stroke or I need long term care. Can I call that in? No. Now, there's other insurance plans that you may want to look into that do have living benefits like that where you can get paid for things like heart attack, stroke, cancer, multiple sclerosis, aortic.
Aortic graph surgery, traumatic brain injury. What if I needed. What if I need long term care because I can't bathe and dress myself or transfer and bathe myself? Yeah, there's provisions for that as well. Alzheimer's, all kinds of reasons that you can get paid while you're living. You don't have to die to get paid, and you don't have to bleed to get covered, because sometimes you don't have to have a nurse come out and pro can prick and prod you for the coverage. Raina, are you pitching life insurance? Listen, if you need coverage, you need to reach out for it, first of all. Second of all, if Pop is a rolling stone and we're worried about what we're leaving the family, let's worry no longer and at least get that kind of thing checked off, because it's a pretty bad deal to cry twice when you cry from losing someone, and then you're crying again because you're trying to make something happen, fix problems, not go into the hole. So. So those are some things you may want to consider because you also remember fed employees. A lot of y' all are feeling really good. You're like, I'm good. I got this coverage. I'm doing what Raina told me. I'm keeping my basic life insurance because of what it does forever. We'll go over that in a second. But, man, I still have health insurance, so I'm good. Yeah, well, what does health insurance have? A max out of pocket. What's the max out of pocket now for a lot of these plans?
Six grand, seven grand, some eight or nine thousand dollars in a year. Well. Or have you saved that amount up? Are you ready to stroke a check for that? That's why sometimes having these other coverages are incredibly beneficial. Raina, you sound like you're speaking from experience. My husband was diagnosed stage four colorectal cancer when he was 45 years old. That was whatever coming up on four years ago. And he's in remission now. He's fine, but I had a policy like this on him. I made the claim right away, and he got paid a lump sum percentage of his life insurance for that. So if there's anybody that's going to Come at you with a little bit of more passion, then it's going to be this chica right here. Because we've lived it, we've been there, we experience the, oh my goodness, what the heck of this diagnosis and what does this mean?
And then also the process of, okay, well, we can face whatever. We just gotta check.
So it's a totally different emotion going into something like that with the big question mark of, dang it, I'm gonna have to take a mortgage to. You know, we weren't there, but many people would say, okay, what do I got to do to pay for this? It's gonna, it's gonna break me. It will never break you with coverage like this. Just cover yourself and your family. But remember what basic does there is permanency to basic life insurance. And remember, I've got a little happy image here. I was playing around with some AI stuff and it needs a little tweak here. Let's see if you can tell me what the correction is. I'm going to leave it. I'm not even going to mention it. If you can reach out and tell me what the edit needs to be, you'll get a high five from me. So basic life insurance, Remember, while you're working, it's all of your salary, 100% of your salary, whatever your salary is actually rounded up, plus 2,000. So if I make $100,000 a year, they're going to round me up to 101 plus 2. So I have $103,000 of coverage.
No matter what choice I make, whether I'm going to keep all of it, half of it, or a quarter of it, I have that whole dollar amount until the age of 65.
After 65, if I have chosen what they call a 75% reduction at age 65 and I'm retired in this example, it will start reducing by 2% a month until the day I turn 60.
I'm sorry, until the day it reaches 25%. Right. So I had 103,000, I turned 65, I stopped paying for it, but the coverage started reducing by 2% a month until I reached that 25% of my 103,000. So whatever, $26,000 or something, forever. For how much? For free. So I keep that amount of coverage forever at no cost.
If you currently have Fegli basic, my encouragement to you is to keep it. Do not waive it with. Even if you do go buy other life insurance, that's fine. This is so inexpensive. While you have it, while you're working and then even in retirement, it is so inexpensive for the benefit you're going to get, assuming you live short or long time, it doesn't matter. The benefit is still very, very high for you. Again, in addition to or in lie of other coverages that you've purchased, many people say, oh, I bought coverage already, I already have other insurance, I'm good and that's fine, totally fine. I would still not get rid of this because of what it does forever. Freeness. How much stuff in your life is free? This stuff right here, that's pretty much all we got. So that's all I have, really. If you have life insurance from the Fed, you I would encourage you to keep basic. I'm not talking about A, I'm not talking about B, I'm not talking about C. I'm only talking about basic in this example because it is what has permanency. Now, they all could have permanency, but basic is what it's permanent for free.
Technically, A is too. But again, we're talking about basic today. And if you have family members or you have yourself and you're wondering, a, do I have enough coverage?
B, I don't have anything that's going to pay me if I get diagnosed with any of that stuff you just said, Raina, or I've got some coverage, but I don't know if it's going to pay me in some of those examples. And I am coming up on Medicare.
You know, I've got, my family has a lot of health history, but I haven't had any yet.
That's the time to get covered. Because once you have already had an event, then you've got prior existing stuff. And when you go underwriting for life insurance, they say, hey, what's a snapshot of your current scenario today when you're asking for the insurance and if you say I've got.
The conversation usually goes like this. Oh, I'm really healthy other than the, you know, CHF and the COPD and the hepatite, all this stuff. Right. So while, you know you've got a very short list, that's the time to at least get started. Let's get something which is better than nothing. And it's not that you have nothing, you've got fegli, probably. But let's talk see what makes sense. Because I'm telling you, the peace of mind that comes with having plans like this, very high, usually you know it to have living benefits in the off chance some of this stuff happens and there's a whole host of them it's more of a cast net approach rather than sort of a laser. So reach out. You can text us, call us, email however you want to carry your pigeon and we can set up a meeting, look at what you got, see what you need and see if you qualify for it and help you get it. You take care and we'll talk to you soon. Call us before you're ready to retire because it's never too soon to start playing.
[00:09:56] Speaker A: Thanks for listening to Reyna Retirement With a strong commitment to ethical standards, Raina works hard to find the right solution for each individual or family who reaches out for advice. To contact rina directly, call 850-450-6500. That's 850-450-6500 or to reach the team at American Federal Benefits consultants, call 1-800-872-8857. That's 1-800-872- 8857. You can also go online to AmericanFederal.org not affiliate with the United States Government. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. The information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. American Federal Benefits Consultants is an independent organization, not a government, an agency or affiliated with the Federal Government or any state government. The terms CSRs, FERs, FELI, and FEHB are all registered trademarks of the U.S. office of Personnel Management. American Federal Benefits Consultants, agents, consultants, or any independent contractors do not provide tax, legal or investment advice and do not engage in the solicitation or sale of securities. Consult with your tax advisor or attorney regarding specific situations.
