FedEx Life Insurance Conversion at Retirement
09-26-2012, 06:06 PM
#21
Gets Weekends Off
Joined APC: Jan 2008
Position: A300
Posts: 120
The early use of Flex spending while knowing you will not actually be paying into it may cause some to take pause. I found this out when I left my last job and had already used more than they took out. I called to preempt a letter come December of where's our money and was told it was somewhat like insurance pooling of everyones money and I didn't have to pay the balance. Didn't feel bad because it wasn't planned but would I spend 3 grand in January and retire in March.....
09-27-2012, 10:41 AM
#22
Gets Weekends Off
Joined APC: Dec 2007
Position: Retired
Posts: 404
If anybody is getting close to retirement and is interested, I have kept pretty good notes and come up with a checklist to aid in the process. The information was scattered in many different locations and I have compiled it in to one checklist.
PM me if you are interested. The checklist is for an age 65 retired military type person, but would at least get everyone else thinking in the right direction.
PM me if you are interested. The checklist is for an age 65 retired military type person, but would at least get everyone else thinking in the right direction.
10-01-2012, 07:22 AM
#24
Gets Weekends Off
Joined APC: Dec 2007
Posts: 425
Fedex life insurance conversion
JJ, first off ........... THANK YOU, for taking the time and energy to share this priceless information with us all .............. I did not know about your particular situation and I do appreciate that you wanted to help us out with such important details ............... Hope all is well in your retirement.
10-01-2012, 02:11 PM
#25
New Hire
Joined APC: Jan 2011
Posts: 7
As some of you have learned, I’ve recently left my LTD status for retirement. Good you say. Me too. The process of retirement is not so much a complicated one, as a lengthy one. One filled with lots of phone calls to various people and departments, to make sure that all goes well, and that all your ducks are in the proverbial row, so that you can start to receive your pension checks and other “retirement benefits” in a timely manner.
The most complicated issue for me, was whether to elect a Straight Life Annuity (SLA), which would have maximized my total monthly paycheck, or to have selected one of the joint surviving spousal options, either the 50%, the 75%, or the 100% option. The SLA pays the most, but if you die, your spouse gets nothing, and in fact, your spouse must sign a notarized document, acknowledging the fact that they understand that you are selecting the SLA.
Selecting any of the surviving spouse options would have lowered my monthly check, but if I were to die before my wife, she would get 50%, 75% or 100% of my monthly check, for the rest of her life, depending on what option I had selected. Whatever option you select, is permanent, and is non-changeable, so a good deal of thought should go into your decision, based on your age, health, financial situation, how much you love your spouse, etc, etc.
With the above in mind, I started to look at life insurance as an alternative to selecting any of the surviving spousal options, with the idea being to provide my wife, in case of my death, a lump sum, tax free pot of money, with which to do whatever she felt like doing. In my case, considering my health history of cancer and heart issues, I found that neither normal life insurance companies, nor those set up to insure “at risk” people, like myself, would insure me. That left converting the group life insurance I had with FedEx into an individual life insurance policy. The reason this could be done is that no medical questions or history are required, and more importantly, no physical is required. Of course the downside to this type of conversion is that the cost of the policy can be through the roof, for just the above stated reasons, ie no medical history, high-risk, etc.
It was at this point that I learned a lot. The group policy that FedEx was providing me had a face value of $400,000, but when I turned 65, they reduced it by roughly 20%, so that what they showed was a value of roughly $330,000. The folks at FedEx Pilot Benefits were fantastic, and they acted on my behalf to get me a quote from Lincoln National Life Insurance Company, the underwriters of the policy. When I got the quote I almost gagged. The premium was very close to $24,000 per year. Undo-able! The conversion would be to a Universal Life policy, so the premiums would stay the same, and I’d be covered until my 121st birthday, at which time the policy would lapse. I called Lincoln directly and asked if there was any other type of policy which I could convert to. Their answer was NO! That was the only policy type that they would convert to. Who lives to 121?
Here’s where it got interesting, because I got a friend of mine involved, who happened to own a business which provides high-risk clients with life insurance. He doesn’t underwrite the insurance, but works with many insurance companies who would write this type of business. He got in touch with Lincoln, and somehow managed to find out that the reason my conversion was going to be so expensive was that Lincoln was illustrating a policy with both an Endowment Rider and a policy which would accrue cash value. Neither were options I wanted. He put me in touch with a woman who told me that Lincoln could write the conversion the way I wanted, and to top that off, she immediately emailed me an illustration which showed the same face amount as the previous policy, but the cost had dropped to under $10,000, a reduction of over $14,000 per year (to age 91.) Fantastic.
However, I couldn’t even start the procedure of applying for the conversion until I was retired. So last Monday, two days after my retirement date, I called the good folks in pilot benefits and asked them to tell Lincoln I wanted to convert to an individual policy. The illustration arrived yesterday and low and behold, it was for exactly the same policy that they initially quoted, the one costing over $24K. However, one good thing was that the face value of the policy was not the $330K I had expected, but the full $400K of the original group policy. I got on the phone with the woman who had given me the information I wanted, and she said to just fill out the Request for Conversion and other paperwork Lincoln had sent me, but include her illustration, along with a check for the first two months premiums and I’d be good to go. The stuff went out FedEx overnight this morning.
The lesson I learned here was to not believe everything I see, read, or hear, but to be persistent and find the answer that fits your needs. I know for most of you, this post has no value, but perhaps there’s a few guys out there that are going through the same thing, and this might be of help.
So in conclusion, I’m taking the Straight Life Annuity and paying for the Universal Life Insurance policy with monies that I wouldn’t have had if I had selected one of the joint survivor options. This way, if my wife dies first, and I don’t want to leave the insurance to the kid, I can cancel the policy. If I’d selected one of the joint survivor options and my wife died two weeks later, I’d be stuck with the reduced pension amount forever. The insurance payout is tax-free, whereas the monthly checks my wife would have gotten, had I selected a spousal annuity would have been taxable, and if she had died shortly after I did, most probably because she no longer had me to drive nuts, all payments would have stopped and nothing would have been going to my kid or my heirs. Peace.
JJ
The most complicated issue for me, was whether to elect a Straight Life Annuity (SLA), which would have maximized my total monthly paycheck, or to have selected one of the joint surviving spousal options, either the 50%, the 75%, or the 100% option. The SLA pays the most, but if you die, your spouse gets nothing, and in fact, your spouse must sign a notarized document, acknowledging the fact that they understand that you are selecting the SLA.
Selecting any of the surviving spouse options would have lowered my monthly check, but if I were to die before my wife, she would get 50%, 75% or 100% of my monthly check, for the rest of her life, depending on what option I had selected. Whatever option you select, is permanent, and is non-changeable, so a good deal of thought should go into your decision, based on your age, health, financial situation, how much you love your spouse, etc, etc.
With the above in mind, I started to look at life insurance as an alternative to selecting any of the surviving spousal options, with the idea being to provide my wife, in case of my death, a lump sum, tax free pot of money, with which to do whatever she felt like doing. In my case, considering my health history of cancer and heart issues, I found that neither normal life insurance companies, nor those set up to insure “at risk” people, like myself, would insure me. That left converting the group life insurance I had with FedEx into an individual life insurance policy. The reason this could be done is that no medical questions or history are required, and more importantly, no physical is required. Of course the downside to this type of conversion is that the cost of the policy can be through the roof, for just the above stated reasons, ie no medical history, high-risk, etc.
It was at this point that I learned a lot. The group policy that FedEx was providing me had a face value of $400,000, but when I turned 65, they reduced it by roughly 20%, so that what they showed was a value of roughly $330,000. The folks at FedEx Pilot Benefits were fantastic, and they acted on my behalf to get me a quote from Lincoln National Life Insurance Company, the underwriters of the policy. When I got the quote I almost gagged. The premium was very close to $24,000 per year. Undo-able! The conversion would be to a Universal Life policy, so the premiums would stay the same, and I’d be covered until my 121st birthday, at which time the policy would lapse. I called Lincoln directly and asked if there was any other type of policy which I could convert to. Their answer was NO! That was the only policy type that they would convert to. Who lives to 121?
Here’s where it got interesting, because I got a friend of mine involved, who happened to own a business which provides high-risk clients with life insurance. He doesn’t underwrite the insurance, but works with many insurance companies who would write this type of business. He got in touch with Lincoln, and somehow managed to find out that the reason my conversion was going to be so expensive was that Lincoln was illustrating a policy with both an Endowment Rider and a policy which would accrue cash value. Neither were options I wanted. He put me in touch with a woman who told me that Lincoln could write the conversion the way I wanted, and to top that off, she immediately emailed me an illustration which showed the same face amount as the previous policy, but the cost had dropped to under $10,000, a reduction of over $14,000 per year (to age 91.) Fantastic.
However, I couldn’t even start the procedure of applying for the conversion until I was retired. So last Monday, two days after my retirement date, I called the good folks in pilot benefits and asked them to tell Lincoln I wanted to convert to an individual policy. The illustration arrived yesterday and low and behold, it was for exactly the same policy that they initially quoted, the one costing over $24K. However, one good thing was that the face value of the policy was not the $330K I had expected, but the full $400K of the original group policy. I got on the phone with the woman who had given me the information I wanted, and she said to just fill out the Request for Conversion and other paperwork Lincoln had sent me, but include her illustration, along with a check for the first two months premiums and I’d be good to go. The stuff went out FedEx overnight this morning.
The lesson I learned here was to not believe everything I see, read, or hear, but to be persistent and find the answer that fits your needs. I know for most of you, this post has no value, but perhaps there’s a few guys out there that are going through the same thing, and this might be of help.
So in conclusion, I’m taking the Straight Life Annuity and paying for the Universal Life Insurance policy with monies that I wouldn’t have had if I had selected one of the joint survivor options. This way, if my wife dies first, and I don’t want to leave the insurance to the kid, I can cancel the policy. If I’d selected one of the joint survivor options and my wife died two weeks later, I’d be stuck with the reduced pension amount forever. The insurance payout is tax-free, whereas the monthly checks my wife would have gotten, had I selected a spousal annuity would have been taxable, and if she had died shortly after I did, most probably because she no longer had me to drive nuts, all payments would have stopped and nothing would have been going to my kid or my heirs. Peace.
JJ
10-01-2012, 06:41 PM
#27
Gets Weekends Off
Joined APC: Jun 2008
Position: Retired, again...
Posts: 608
a4....
My advice is to postpone your retirement, if possible........UNTIL you can deide on your course of action, AND get confirmation of the term life policy you desire.
I chose to forego the survivor benefit, and elected to go for the big term life policy......I started several months before my retirement, but still had not received confirmation of insurability after the required physical exam.
Guess what ? I was turned down due to a very minor issue, but it was too late to change my retirment annuity election. Don't get caught in this trap.
Regards,
BG
My advice is to postpone your retirement, if possible........UNTIL you can deide on your course of action, AND get confirmation of the term life policy you desire.
I chose to forego the survivor benefit, and elected to go for the big term life policy......I started several months before my retirement, but still had not received confirmation of insurability after the required physical exam.
Guess what ? I was turned down due to a very minor issue, but it was too late to change my retirment annuity election. Don't get caught in this trap.
Regards,
BG
10-01-2012, 07:14 PM
#28
Gets Weekends Off
Thread Starter
Joined APC: Sep 2006
Position: Retired
Posts: 3,717
a4jock,
I agree with FedElta in that without having your insurance ducks in a row, ie, having the policy IN PLACE, I'd be very careful about going through with your retirement, or at least with making your spousal selection. I believe you should postpone your retirement for another month or two, in order to get your insurance taken care of, then you can make the final selection, based of fact, not wishful thinking. That was the biggest challenge I faced, because I didn't actually have the insurance policy, before I made my selection. What I did have was the written confirmation, from an executive at Lincoln National, that the policy would be in place, once I had finished the paperwork and paid the first two months premium. Not the absolute perfect condition, but hopefully it'll work as I'm waiting for the policy even as I write this.
If you're buying Term Life Insurance, make sure that you get the longest term you can, or at least a term long enough to take care of everything you need to take care of, like kids in college, your mortgage (if you still have one), etc, etc. 10 and 20 year term policies are available, and their beauty is that your monthly/annual costs are fixed for the duration of the policy. When the policy comes up for renewal, you can expect the cost to go up exponentially, but hopefully by then you won't need the policy any more.
Regardless, best of luck in your upcoming adventure. It's kind of nice to sleep in ones own bed each night.
JJ
I agree with FedElta in that without having your insurance ducks in a row, ie, having the policy IN PLACE, I'd be very careful about going through with your retirement, or at least with making your spousal selection. I believe you should postpone your retirement for another month or two, in order to get your insurance taken care of, then you can make the final selection, based of fact, not wishful thinking. That was the biggest challenge I faced, because I didn't actually have the insurance policy, before I made my selection. What I did have was the written confirmation, from an executive at Lincoln National, that the policy would be in place, once I had finished the paperwork and paid the first two months premium. Not the absolute perfect condition, but hopefully it'll work as I'm waiting for the policy even as I write this.
If you're buying Term Life Insurance, make sure that you get the longest term you can, or at least a term long enough to take care of everything you need to take care of, like kids in college, your mortgage (if you still have one), etc, etc. 10 and 20 year term policies are available, and their beauty is that your monthly/annual costs are fixed for the duration of the policy. When the policy comes up for renewal, you can expect the cost to go up exponentially, but hopefully by then you won't need the policy any more.
Regardless, best of luck in your upcoming adventure. It's kind of nice to sleep in ones own bed each night.
JJ
10-02-2012, 05:07 AM
#29
Gets Weekends Off
Joined APC: Dec 2007
Position: Retired
Posts: 404
I started on acccuquote.com and they hooked me up with Banner Life and Transamerica. Got 500K for 20 years for just over $440/month and 500K for 25 years for $650/month. Premium never changes. I was 64 1/2 (Insurance Age 64) when I put the policies in force. Took about 4 months. They did backdate to save my age 64 rate.
If you really want to "milk" FedEx for everything then you may want to look at the refund option for a survivor benefit. They will pay you a monthly sum for your lifetime then your survivor or estate a lump sum if you die before the value is paid out. Takes about 10 years to "break even." In my case, the cost was about 6% of the no survivor benefit option. Your actual cost will be spelled out in your estimate from Mercer.
Just another quick note; found out today that the first retirement check doesn't come on the first day of the month after you retire. Takes about 3 weeks to show up. After that, they come on the 1st (or the first business day.)
If you really want to "milk" FedEx for everything then you may want to look at the refund option for a survivor benefit. They will pay you a monthly sum for your lifetime then your survivor or estate a lump sum if you die before the value is paid out. Takes about 10 years to "break even." In my case, the cost was about 6% of the no survivor benefit option. Your actual cost will be spelled out in your estimate from Mercer.
Just another quick note; found out today that the first retirement check doesn't come on the first day of the month after you retire. Takes about 3 weeks to show up. After that, they come on the 1st (or the first business day.)
10-02-2012, 11:01 AM
#30
Gets Weekends Off
Thread Starter
Joined APC: Sep 2006
Position: Retired
Posts: 3,717
JJ
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