What is a Beneficiary?
A beneficiary is someone an employee recognizes to ultimately benefit from their life insurance and retirement contributions. The benefits are in the form of money the employee passes down. Beneficiaries are an important part of an employee’s retirement plan, as they give purpose and guidance for what they are leaving behind. Beneficiaries are identified on:
- SF-1152, Designation of Beneficiary, Unpaid Compensation of Deceased Civilian Employee
- SF-2823, Federal Employees' Group Life Insurance (FEGLI) Designation of Beneficiary
- SF-3102, CSRS/FERS Designation of Beneficiary
While employees may identify beneficiaries directly in the above forms, others may be identified by way of Order of Precedence, as set by law.
Order of Precedence:
- Widow or widower, if none;
- Children in equal shares, if none;
- Parents in equal shares, if none;
- Executor or Administrator of the employee’s estate, if none;
- Next of Kin under the law of the State where the employee lived at the time of their death.
Types of Beneficiaries:
- Primary Beneficiary: A primary beneficiary is the person named as the first person to receive the death benefit.
- Contingent Beneficiary: A contingent beneficiary is named as the ‘second in line’ to receive the death benefit should the primary beneficiary predecease the owner of the policy.
| Example of contingent beneficiary: | |
|---|---|
| John Doe, if living | 100% |
| Otherwise to: Jane Doe | 100% |
Choosing a Beneficiary:
When figuring out who should be the employee’s beneficiary, whether the employee is single or married can have an impact on the decision. For employees with more complicated family dynamics, the decision may not be so easy. Employees should think about the following:
- Am I married?
- Do I have children?
- Who depends on me financially?
- Who will require financial support upon my passing?
Former Spouses:
A divorce does not automatically affect the designation of beneficiary that was filed at some earlier time. Employees who have designated a now former spouse to receive life insurance or employee benefits should consider updating their beneficiary forms if they want their benefits to go to someone else.
Designation of beneficiary may be changed at any time unless there is a court order in effect.
Court Orders:
Survivor benefits must be paid in accordance with the terms of a valid court order, regardless of whether the employee completes a beneficiary form. The valid court order supersedes any of the employee’s prior designations and the order of precedence if the appropriate office receives a certified copy of the court order prior to the employee’s death.
When is a Minor a Beneficiary:
If a minor is a beneficiary, it is common that a trusted adult be named to oversee any inheritance. A trust is a great way to set up a substantial Estate Plan that allows certain provisions for how and when a minor beneficiary should receive specified assets.
CBP Employee Assistance Program:
HRM published a CBP Survivor Benefits Brochure that provides a summary of the range of the possible benefits and entitlements, along with the typical timelines for the payment of survivor benefits.
CBP EAP also provides CBP employees with multiple services, such as assistance with the preparation of a will or estate planning at no cost. Services are available 24 hours a day, 7 days a week.
- Participation in EAP services is voluntary.
- EAP services are free of charge for the employee, eligible spouse, domestic partner, and unmarried dependent children up to age 26 who are covered by their parents' health insurance.
- EAP continues for 1 year into retirement for retirees and their eligible family members.
Conclusion:
Naming a beneficiary only takes a few forms and a few minutes. All that is required is to provide basic personal information, information about your beneficiaries, and have two individuals witness your signature. Your loved ones will thank you knowing you have taken the necessary steps to protect them.
Completed forms may be submitted through the RABAS Portal.