Life Insurance: Ers Cost And Coverage Explained

Employees and retirees of the State of Texas are eligible for insurance benefits through the Texas Employees Group Benefits Program (GBP). Active employees enrolled in a GBP health plan automatically receive $5,000 of Basic Term Life Insurance and $5,000 of Accidental Death and Dismemberment (AD&D) coverage at no cost. This benefit provides a foundation of coverage, which can be built upon with additional coverage options, some of which do not require providing Evidence of Insurability (EOI). Retirees who enroll in a GBP health plan are automatically enrolled in a $2,500 Basic Term Life Insurance policy.

Basic Term Life Insurance

In addition to the State of Texas, the Texas Employees Group Benefits Program (GBP) is available to many state and higher education institution retirees and their eligible dependents. If retirees enroll in a GBP health plan, they will be automatically enrolled in a $2,500 Basic Term Life Insurance policy through Securian.

Term life insurance is distinct from whole life insurance, which requires scheduled payments for the policyholder's entire life. Term life insurance rates are typically lower than whole life insurance rates because policyholders are only paying for coverage over a specific period.

Dependent Term Life Insurance

Who can qualify as a dependent?

Family members who rely on your income may qualify as life insurance dependents. This includes:

• Spouses: For dependent life insurance purposes, a spouse is usually defined in broad terms and typically includes anyone treated as a spouse under state law, including a common-law spouse.
• Children: Any children for whom you are a legal guardian can qualify as dependents, including biological children, adopted children, and stepchildren. Dependent coverage for children is usually offered only until a child reaches a set age, often 26.
• Older parents: Older parents may qualify as dependents if you provide care and assistance for them, but plans may vary in coverage and eligibility.

Eligibility and Enrollment

If you are an active employee enrolled in a Group Benefits Program (GBP) health plan, you will automatically receive $5,000 of Basic Term Life Insurance and $5,000 of Accidental Death and Dismemberment (AD&D) coverage at no cost. You can then apply to enrol your eligible dependents in term life insurance. During your first 31 days of employment, you can enrol your eligible dependents without evidence of insurability (EOI). After your first month on the job, you can apply to enrol them with EOI during Summer Enrollment or with a qualifying life event (QLE).

Eligibility and Enrollment

As an eligible employee of the State of Texas, you can participate in Term Life insurance programs for yourself and your eligible dependents. Active employees enrolled in a Group Benefits Program health plan (GBP) automatically receive $5,000 of Basic Term Life Insurance and $5,000 of Accidental Death and Dismemberment (AD&D) at no cost.

Every employee who enrolls in a GBP health plan qualifies for Basic Term Life and AD&D Insurance. This coverage is not available to family members. The state pays 100% of the Basic Term Life and AD&D Insurance for eligible full-time employees.

If you enroll in a health plan through ERS, you automatically get basic term life insurance. As a result, you can apply to enroll your eligible dependents in term life insurance. You may enroll a spouse and/or unmarried children under 26. During your first 31 days of employment, you can enroll your eligible dependents without evidence of insurability (EOI). After your first month on the job, you can apply to enroll them with EOI during Summer Enrollment or with a qualifying life event (QLE).

If you have Dependent Term Life Insurance at the time you retire, you may continue the coverage in retirement without EOI, as long as the covered dependents remain eligible. During the first 31 days after you retire, you can apply to enroll your eligible dependents with EOI. After that, you can apply to enroll them with EOI during your annual enrollment period or with a QLE.

As a retiree, you can remove a dependent or waive Dependent Term Life Insurance at any time. You do not have to wait for your annual enrollment period or a QLE.

Accelerated Life Benefit

An accelerated life benefit, also known as an accelerated death benefit rider, is a life insurance policy add-on that allows you to access your policy's death benefit before you die. This is useful if you are diagnosed with a terminal illness or a serious medical condition. This benefit is designed to alleviate financial stress during a challenging time.

To access the accelerated life benefit, you will need to prove your condition to your insurer. Each insurer has different requirements, so be sure to check which terminal illnesses or circumstances qualify. Some insurers may also allow this benefit to be activated if you need to go into a nursing home or develop a critical or chronic condition.

Once your accelerated life benefit is activated, you may be permitted to use a portion of your death benefit while you are still alive. The amount you can withdraw will depend on your insurer and policy. Typically, you can use the payout for anything you want, such as medical bills, care costs, or other expenses. However, tax implications may vary depending on your circumstances.

Many life insurance companies include an accelerated death benefit rider in their policies at no extra charge. However, if you do access this benefit, you may have to pay a processing fee that will be deducted from the amount you receive. In some cases, you may also pay a higher premium.

Viatical Settlement Option

The ERS (Employees Retirement System) of Texas offers life insurance to eligible employees of the State of Texas and their eligible dependents. Active employees enrolled in a Group Benefits Program health plan (GBP) automatically receive $5,000 of Basic Term Life Insurance and $5,000 of Accidental Death and Dismemberment (AD&D) insurance at no cost.

One of the options available to retirees is the Viatical Settlement Option. This option is for those who have been diagnosed with a terminal illness and have a life expectancy of two years or less. In this case, the retiree may want to sell their insurance policy to a viatical settlement company in exchange for a lump sum of cash.

A viatical settlement is an arrangement in which someone who is terminally or chronically ill sells their life insurance policy at a discount from its face value in return for immediate cash. The buyer of the settlement pays the seller a lump sum and then pays all future premiums left on the policy. The buyer becomes the sole beneficiary and will receive the full amount of the policy when the original owner dies.

The process of viatical settlements is regulated and involves reputable brokers to ensure a fair and transparent transaction for both the seller and the buyer. State laws regulate viatical life settlements, and the process involves legal contracts to protect the interests of all parties involved.

To be eligible for a viatical settlement, the policyholder must meet specific criteria, including having a life-threatening illness, such as cancer, ALS, or another serious condition, and a policy with a face value of $150k or more.

Frequently asked questions