Expert's View

Did you know that your children may be entitled to certain benefits on your death? Well, they are.

One of them is the proceeds of your Federal Employees’ Group Life Insurance, which has no age cutoff but the payout will depend on the beneficiary designation you make—or don’t. The other is a survivor annuity, which is automatic but has age cutoffs and other eligibility restrictions.

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Life insurance
If you are an employee or retiree who is covered by the FEGLI program, when you pass on the proceeds of your life insurance will be paid to the beneficiary(ies) you designated to receive them. For example, you could designate part of the amount to your spouse and part to a child or children—or even all of it to the younger generation.

If you haven’t filed such a designation, there is a “standard order of precedence” under which your spouse would receive the full amount. If you have no spouse, your child/children would be next in line.

Annuities
As a rule, to be eligible for a survivor annuity your child must be an unmarried dependent under 18 years of age; if you are a retiree, there is no requirement for you to have designated a survivor annuity.

Included in the term dependent are 1) an adopted child, 2) a stepchild who lived with you in a regular parent-child relationship, 3) a recognized natural child, and 4) a child who lived with and for whom a petition for adoption was filed by you and who is adopted by your surviving spouse after your death.

The age 18 limit is waived for two groups of children. First, an unmarried dependent child between age 18 and 22 years of age who is a student regularly pursuing a full-time course of study or training. Second, for a dependent child who is incapable of self-support because of a mental or physical disability incurred before age 18. And that annuity continues as long as he or she remains both incapable of self-support and unmarried.

The rules governing the payment of annuities to children are the same for CSRS and FERS employees and retirees. However, if you are a CSRS-Offset or FERS employee/retiree when you die, the annuity payments to a child of a will be reduced by the amount of the Social Security benefit payable based on your Social Security-covered federal service.

The annuity payable is based on a formula that is increased annually by a cost-of-living-adjustment of the same percentage applying to CSRS retirees.

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If the child has a living parent who was married to the employee or retiree, the monthly benefit currently payable is $552 per month per child. If there are more than three qualifying children, the payment is a maximum of $1,659, divided by the number of qualifying children. If there is no living parent, the figures are $663 and $1,990, respectively.

Thus, in both cases each child up to three gets the pertinent individual amount; if there are four or more eligible children, the rate per child goes down proportionately.

If a parent who was married to you dies before a child’s benefit ends, the annuity is increased from the lower to the higher rate. Benefits may also be adjusted for other reasons. For example, if they are being paid to more than three children and the annuity for one of them loses eligibility (such as by aging out), the annuities of the remaining children are increased prospectively.

The survivor annuity to each qualified child begins the day after your death and ends on the last day of the month before the one in which the child marries, dies, ages out, or in the case of eligibility extended due to disability becomes capable of self-support.

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