Bill Requires Lump Sum Payment as FEGLI Default Option
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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