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• Waiting Period before the Employee Can Make an Assignment – There is no waiting
period.
• Bi-weekly or Monthly Premium
• Whether the Policy Has Accelerated Benefits – Yes, but only Basic insurance can be
accelerated (i.e., only Basic insurance can be taken as a living benefit). Only employees,
not retirees, can elect a living benefit.
• Whether Partial Acceleration Is Permitted – Yes, i.e., employees (but not retirees) can
elect a partial living benefit.
• Whether the Viatical Settlement Company Can Pay the Premiums – No. By regulation,
premiums must continue to be withheld from your salary, annuity, or compensation. You
can negotiate privately to have the viatical settlement company reimburse you. (This is a
private transaction between you and the company. Neither your agency nor OPM is a
party to any arrangement you make with a viatical settlement company.)
• Whether There Are Any Assignments Against the Policy – The employing office must
check to see whether you have already assigned your insurance and whether that
assignment still appears to be valid.
• Whether the Policy Has a Disability Waiver – There is no disability waiver under FEGLI.
• Whether the Policy Can Be Converted – The group insurance can be converted if it
terminates, other than by voluntary cancellation. If the insurance has been assigned, only
the assignee(s) can convert it, and only if it terminates. EXCEPTION: If the annuity or
compensation of an insured individual is terminated, or if the Department of Labor finds
that an insured compensationer is able to return to duty, his/her FEGLI coverage held as
an annuitant or compensationer stops on the date of the termination or finding. There is
no 31-day extension of coverage or conversion right.
• Whether the Employee Must Have a Minimum Amount of Insurance to be Eligible to
Make an Assignment – No.
• Whether an Irrevocable Beneficiary Can Be Designated – No. Designations can be
changed at any time. Only an assignment is irrevocable.
Tax Treatment of Viatical Settlement Payments
Qualified payments from viatical settlement companies received on or after January 1, 1997, are
not subject to Federal income tax (Pub. L. 104-191, the Health Insurance Portability and
Accountability Act of 1996, Subtitle D, Treatment of Accelerated Death Benefits). Payments
received from a viatical settlement company before that date were subject to Federal income tax.
This law sets qualification standards for viatical settlement providers, terminally ill insured
persons, chronically ill insured persons, and in the case of chronically ill insured persons, how
the payment may be spent. If you are considering assigning your insurance to a viatical
settlement company, you should consult a tax advisor to determine if you and the viatical
settlement company meet the qualification standards. Under this law, to be considered
terminally ill, a person's life expectancy can be no more than 24 months.
This law amends the Federal Internal Revenue Code, which directly affects Federal income
taxes, not state taxes. However, many states have laws, regulations, or rulings concerning the
taxability of payments received from viatical settlement companies. You may wish to consult a