It’s not something we want to think about, but what if you died? What are the benefits FRS pays to your spouse and family? What if you die in the line of duty? What if it’s not in the line of duty? Does it matter? And what’s the difference in life insurance benefits between the pension plan and the investment plan? Hang in there—that’s what we’re going to talk about in this video.

Hey, it happens, right? Well, let’s hope it doesn’t happen to you. So let’s look first at the pension plan. Based on the benefits described on the myFRS website as of the date of this video, if you are Special Risk and die in the line of duty and you are enrolled in the pension plan, your spouse, if you’re married, gets 100% of your monthly salary—for life. And your spouse will receive this benefit regardless of your length of service, even if you named someone else as your beneficiary. Wow.

Now if your spouse subsequently dies or if you have no spouse, this benefit will be paid to your unmarried children until the youngest child reaches age 18. However, the payments may be extended until the 25th birthday if your child is unmarried and enrolled as a full-time student. Good reason, I guess, for the kids to hold off on those wedding bells and hit the books until at least 25, if this applies.

So that’s all if you die in the line of duty. But what if you die outside of the line of duty, while you are still employed and in the pension plan? Well, in that case, it’s not so good. If your beneficiary does not qualify as a joint annuitant, as in a spouse or kids, all they would receive is a refund of your personal contributions into the pension plan, if there were any. This might be a reason to consider reviewing and possibly beefing up your personal life insurance program.

If your beneficiary does qualify as a joint annuitant, then they have a few choices:

The first choice: a refund of any personal contributions you made, if any. Probably not going to be enough to make much of a difference. Again, consider reviewing your own life insurance program to assure your family is protected.

Second choice: They could get a monthly benefit calculated as if you had retired on your date of death and had chosen Option 3 on the pension plan. Keep in mind that this benefit would be reduced for early retirement if you died before reaching your normal retirement age. Again, especially in the earlier years of your career, this probably isn’t going to amount to much and may be leaving your family something significantly less than financially secure.

There is a caveat to this one, however. If your joint annuitant who is not your spouse is under the age of 25 or is disabled and incapable of self-support, your benefits will be paid under Option 1 and they’ll get this benefit until they reach the age of 25 or until no longer disabled. Something to consider if you have a special needs son or daughter.

The third choice is a deferred payment Option 3 benefit where the benefit will be calculated using the ages you and your joint annuitant would have attained when the benefit starts. The advantage here is that there’s less reduction for early retirement.

So that’s all about the pension plan if you die before retirement—clearly, different benefits depending on if you die in the line of duty or not. But let’s talk about what the benefits are in the pension if you die after retirement.

After retirement, the payments made to your beneficiary will be dependent on which payment option you chose. We’ll talk more about those in another video, but basically, if you need payments to continue to a joint annuitant, like your spouse or a child under the age of 25 or a disabled child, then you are going to want to pay close attention to Option 3 or 4. Again, more on that in another video.

So what benefits are there if you die while you are in the investment plan? If you are actively employed with an FRS participating employer, and you have not taken a distribution from your plan, and you are a Special Risk employee and die in the line of duty, your spouse (if you’re married) will receive a monthly benefit equal to 100% of your last monthly salary for the rest of their lives—just like if you were in the pension plan. If your spouse subsequently dies or if you have no spouse, the benefit will be paid to your unmarried children until the youngest child reaches age 18.

If you die outside of the line of duty and you are vested in the plan and before retirement, your beneficiary can elect to receive the full value of your vested investment plan account balance, whatever it is. There are a few additional options here that you can see on the website here, and I’ll also put the link below.[1]

Now if you’ve already started distributions in the investment plan, then basically your beneficiary will receive the balance of your account value at that time, unless you’ve set up some sort of annuity payment option—in which case, it would follow that option.

It all can get pretty confusing, pretty fast. And this is the kind of thing that a mistake can change lives for the worse. Unless you feel like you’ve got a pretty good handle on this, you might want to consider talking to someone, like maybe a fiduciary advisor who isn’t compensated on selling you anything like life insurance, to get a second opinion.

Schedule a complimentary consultation with a fee-only financial planner to discuss your personal situation in more detail.

[1] https://www.myfrs.com/FRSPro_ComparePlan_Servivor.htm