Top 10 Mistakes Made by Federal Employees — Part 9: Neglecting to Properly Insure Your Spouse and Children

3.13.26: Audio automatically transcribed by Sonix

3.13.26: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski with American Benefits Exchange. And as always, I really appreciate you taking the time out of your busy schedule to join us, to view our content. That's what it's here for. It's for you, the federal employee, that's looking for information when it comes to your benefits and retirement situation. And we are in the middle of a series called The Top ten Mistakes Made by Federal Employees. This is a brochure that I created years ago, and just doing a revamp of it, a revisit to it, and giving you some further insight into the top ten mistakes. And we're going to talk maybe a few extra once the series is over, because understand, I just said this is the top ten. This is by no means all ten of the mistakes that I see federal employees make. But just after working with federal employees specifically now for 14 years and doing thousands of benefits and retirement evaluations and reviews and answering a ton of questions. Uh, speaking parts and, and all of these things. These are the mistakes that I see federal employees making the most. And hopefully through this series, you can figure out if you're making those and if you are, how to avoid making them or to correct your situation and avoid making them going forward. So like I said, this has been a ten part series or will be when it's completed a ten part series with maybe a few extras at the end.

Speaker 1:
But we're working today with mistake number nine. So let's dive into today's content and talk about mistake number nine of the top ten mistakes made by federal employees. As I said, this was the brochure. If you want a copy of it, reach out to us. Just a quick little pamphlet. It's a digital. We also have physical copies, but it's something I created years ago. And really those mistakes have remained pretty constant over the years. But if you want a copy, you got to go to our website. It's federal retirement Show.com fill out the form. One of our experts, if it's not me personally, will be reaching out. Not only will we get you a copy of the top ten mistakes made by federal employees, but we'll also do a full benefits and retirement evaluation. Get all of your questions answered so you can be sure 100% that you're no longer going to be making these mistakes. So as I said, today is mistake number nine. And this is something that I don't want to say is maybe controversial. That's maybe not the right word, but it's neglected, I'll tell you that. It's not something that federal employees generally think about because we're looking at your situation as a federal employee. And number nine is neglecting to properly ensure your spouse and kids okay.

Speaker 1:
Neglecting to properly ensure your spouse and your children. And what do I mean by this? This is with life insurance. Now, if we go back and we go back through the mistakes, we go back through all the content that we've done over the years. We've talked a lot about your federal employee group, life insurance, and most of your fegley revolves around getting coverage for you, the federal employee, right? You have basic you have option A and option B. Those are all on you, the federal employee. And essentially you can get up to six times your salary. That's a base. Basic is going to be one multiple of your salary. Option B can get up to five times your salary. So now we're at the six multiples of your salary essentially in life insurance coverage. Plus if you have option A, that's an extra $10,000. So there's a significant amount of life insurance that you can get on yourself. And why do you do that? Because you want to protect your family. You want to say, what if something happens? I want to make sure that my spouse, my kids are taken care of financially. If something happens to me, the federal employee. But what happens if it does not happen to you? It happens to your spouse or to your kids. Are they properly covered to help you financially? If something were to happen now, it's not like we don't want to think about what's going to happen to us, or what's going to happen to our spouse or our kids, but we do want to be covered for the what ifs in life.

Speaker 1:
And now I'm talking about option C, and that's the only part of your Fegley that covers spouse and kids. And there's a misconception, a misconception that with option C, people can get five times their salary on their spouse. And hopefully that's not you. But I've seen that misconception over the years. And it's not five times your salary, it's five multiples. Now, what are the multiples? There's a unit, I should say for option C, it's five units of coverage is the max that you can get on a spouse or a child. And a unit of coverage is $5,000 for your spouse and $2,500 for each child. And a child is under the age of 22 and not married. It doesn't matter if you have zero kids, one kid, or ten kids. All of them are covered for the same amount, however many units you've chosen. And this is where that misconception goes to the wayside because I've seen people say, no, I've got five times for me and five times for my spouse or, you know, I'm covered there. I've got coverage on my spouse. Well, the max you can have is 25,000.

Speaker 1:
Now, look, I don't want to think about what's going to happen. If something occurred with my spouse, but I just know. Even if my spouse were a stay at home spouse. And, you know, took care of the household and the kids and things like that. If something happened to her in my family, I know 25,000 isn't going to properly cover it. So this is why I call it a mistake, because there's a big imbalance. You can get so much life insurance coverage on you as a federal employee through the federal system, but they do not offer a whole lot of coverage for your spouse. And this just scratches the surface, right? It's just the tip of the iceberg. And normally what is needed, and even if you're the, you're the primary breadwinner as a federal employee and your spouse stays at home and all that, I know that again, if 25,000 or something happened, 25,000 is not necessarily going to cover it. So we need to supplement that somewhere. You want to make sure that your spouse is properly covered. Now, there's no rule of thumb or exact science on how to do this. Some people want to make sure that they have equal coverage on both sides. So meaning you have the same coverage as your spouse. Some people say, hey, my spouse is a stay at home spouse, and I'd rather let's get up to 50% of my coverage.

Speaker 1:
That's fine, but I know that again, 50,000 or sorry, 25,000 is is not going to cover it for what's available through option C. So that's where our big imbalance is. And you've got to correct that. You've got to make sure that your spouse is properly covered. Again, it's not something we want to think about what it's going to happen if something happened to my spouse, but you want to be covered. We've talked about the life insurance piece in the past. You cover your home, you cover your auto, you cover all these things with insurance because it's just normal. And then when people get the life insurance, like, ah, I don't want to touch that. You want to make sure that you're properly covered and your family's properly protected for the what ifs in life. Now there's ways to go about it where that life insurance can also add value to your family over time if people live longer, right? That's the idea. We don't want to talk about dying. We don't want to talk about what happens if we pass away too soon. But what if we live too long? You can also design plans that not only cover you while you're younger with a significant amount of insurance, but then they add value to your family as you go. So it's not like a true use it or lose it.

Speaker 1:
People are like, man, I don't want to spend money on life insurance. Yeah, but what type of life insurance are you talking about? Or what kind of plan have you been proposed? Or what have you seen out there that's giving you this bad taste in your mouth about life insurance? It's a it's a protection that I believe every family needs to have and every family needs to be properly covered. So that's something to look at for the spouse. Now for the kids. The kids. Max covers 12,500. I said it's 2500 per unit times five units, 12,500. And kids are only covered until they're attained age of 22. Or they get married now, whichever. Sooner. I don't want to think about something happened to my kids, right? But I know that this is something that I want to ensure that they're properly covered, and I want to ensure that they can keep it with them once they get older and grow and have a family of their own. And that's not going to happen with option C. Option C here. If you chose to go that route, and even if you got the five units, you have 12,500 on each kid. But when they hit age 22, that just goes away. There's no conversion option. They can't take it with them. They can't continue it. It just stops. What if you can get a plan that grows with them? What if you can get a plan that properly covers them today? I know again, if something happened at 12,500, it's not going to cover it.

Speaker 1:
So what if I can provide more value as far as coverage for our kids and then more value as they get older? It grows with them. It can end up being something that they can continue on for their family in the future. And they're going to be really thankful that their parents, their mom and their dad took care of this for them and added that value when they were really young. And that's something that was done for me. Uh, my great grandmother had purchased a, a plan on me. And when I became of age, my parents said, hey, you can, you can take the value out of this plan that your great grandmother set up or you can continue paying for it. I was a 19 year old kid and I just took the money that came out. But I would advise that and I'm doing it for my kids as well. Uh, that you provide this value, that choice. It's a, it's a great thing to do rather than just putting money into something that's going to eventually go away. Like this. Option C with Fegley, you can provide better value for our kids and make sure that it's a plan that grows with them, grows value, something they continue after they're out of the home, they're on their own and they're starting a family of their own.

Speaker 1:
So this is the reason why I think, uh, this number nine mistake is important because it's not something that's generally talked about. You talk to other federal benefits experts, things like that, people that do kind of what we do and they don't really talk about this. It's all on the federal employee. What about the spouse and your kids? That's where you want to ensure that you're properly covering them and having the protection for the entire family, and also having it be a better value for the family, a better, uh, use of your money. A better use of your resources. And also you have an adequate amount, right? We talked about the 25,000 to 12,500 is not even going to scratch the surface when it comes to what's needed. Yes, you can provide more coverage, better coverage and coverage that could provide better value down the road. So I think it's all win win, win, win win. But you've got to recognize that you may be lacking in this department. Everybody wants to talk about retirement. What's my pension going to look like. And TSP and Social Security. But what about the rest of your family. Are they going to be properly covered? Not only if something happens to you, but are they going to be covered so that if something happens to them, the family can continue going and there's not a big, um, disruption there more than, you know, somebody passing away.

Speaker 1:
Right? I know that's the reality of things. We don't want to think about what happens, uh, if somebody passes away, but we want to make sure that we have the right coverages in place and the right value for your family so that, uh, the protection is there. And then also the value down the road. If you guys live long into retirement, great. But now you've added this this extra value for the family. So hopefully that made sense. When it comes to properly covering your your spouse and children above and beyond what options C provides for you or allows for you. If you have questions, if you have comments, if you have concerns, reach out to us. I mentioned that the website is federal retirement show.com. You can fill out the form. One of our experts will go over your entire situation, answer your questions, just make sure that you are properly set up and you're projecting on the right path as you're going through your career and into retirement. I said earlier, we've done a lot of different episodes just in this series. This is mistake number nine. Go back and view our other episodes in this series. Look at mistakes one through eight and look out for mistake number ten.

Speaker 1:
When we record that next week. And then we've got a library of other episodes over 165 now episodes for you, the federal employee, answering a lot of questions, comments, concerns from federal employees just like you. Giving you proper education on all these things. We put it out there for you so you can have all these resources and find the information with easy to understand language. Try to make it very simple. But if you still have questions or things that we have not covered yet, reach out to us. We'd love to have an episode based on your specific question. Uh, last thing I'm going to ask you to do if you like this content, this episode, this series, this podcast, radio show, share it with a colleague. You work with other federal employees and we want to help as many federal employees as possible. That's our job. But we can only get to so many people with our time. If you're able to refer us to a colleague and just say, hey, I think you need to watch this show. I think you need to reach out to these folks and do a benefits evaluation, get a checkup on your situation. We appreciate that. Thank you in advance. So you've been watching the federal retirement show. My name is Val Majewski, again with American Benefits Exchange. And I look forward to seeing you guys on a future episode.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including advanced search, world-class support, secure transcription and file storage, share transcripts, and easily transcribe your Zoom meetings. Try Sonix for free today.