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Bill Requires Lump Sum Payment as FEGLI Default Option
September 27, 2010
Last week, a proposed bill in the House would require lump-sum payments as
the default payout option for Federal Employees Group Life Insurance
(FEGLI) program beneficiaries.
If passed, the Federal Life Insurance Transparency Act, H.R. 6175, introduced
by Rep. Gerald Connolly, (D-VA), would require a lump-sum payment the default
option for the distribution of FEGLI benefits if the insured party makes no
other election.
Under the current regulations, the default option under FEGLI transfers
benefits to a checking account known as a Total Control Account, which has
been widely critcized
for not being federally-insured and subject only to state regulation.
The National Treasury Employees Union (NTEU) offered support of the
bill. "NTEU believes the lump-sum payment is the most straightforward and
sensible approach to paying insurance benefits if no election is made," said
NTEU President Colleen M. Kelley.
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