Expert's View

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What can you do if the law won’t allow you to provide a federal retirement survivor annuity for someone you want to have it?

While the law won’t permit you to do that, it does include language that would allow you to give them a different kind of benefit to someone. It’s called an insurable interest annuity, and you can purchase that when you retire.


Under the insurable interest annuity provision, you can provide that benefit to anyone who is financially dependent on you and could reasonably have been expected to derive a financial benefit from your continued life. First in line would be your current spouse, if a court order blocked him or her from receiving a regular survivor annuity.

It could also be given to a blood or adoptive relative closer than a first cousin (for example, a child), a former spouse, or someone to whom you are engaged to be married. It could be given to a partner in a common-law marriage, but only if the state you live in recognizes them, or if the common-law marriage occurred in such a state even though you now live in one that doesn’t recognize them.

If the person to whom you want to give that benefit isn’t among those named above, you can still establish an assumption of insurable interest by submitting affidavits from one or more people who have personal knowledge of your relationship.

They’d need to confirm that relationship, the extent to which the person is dependent on you, and the reasons he or she might reasonably be expected to derive a financial benefit if you were alive. You would also need to provide proof that you are in good health, which you could do by having a licensed physician sign and date a current medical exam.

If you go down that road, the insurable interest annuity will provide your survivor with 55 percent of the dollar amount you select as a base. The cost for that benefit will depend on two things: 1) the difference in ages between you and the person you want to get the benefit and 2) the amount of your annuity that’s available to be used as a base. The latter will depend on whether there is anyone else – such as a current or former spouse – who is entitled to a survivor benefit

To figure out how much your base annuity would be reduced if you elected an insurable interest annuity, use the following table:

• 10 percent if the survivor is the same age, older than, or less than 5 years younger
• 15 percent if 5 but less than 10 years younger
• 20 percent if 10 but less that 25 years younger
• 25 percent if 15 but less than 20 years younger
• 30 percent if 20 but less than 25 years younger
• 35 percent if 25 but less than 30 years younger
• 40 percent if 30 or more years younger


The Insurable Interest Annuity Option How Court Orders Impact Federal Benefits

FERS Retirement Guide 2022