1 Government Benefit ProgramsTMK2174 Footprints Brainshark 12/2/2017 Welcome. Today you’re going to learn about Government Benefit Programs. After you complete this training, refer to any of the modules as your resource on Government Benefit Plans. Remember, this material is for training and has not been filed or approved as advertising. It should not be used as a sales tool. Government Benefit Programs Training Not approved for advertising use TMK2483

2 Government Benefit ProgramsTMK2174 Footprints Brainshark 12/2/2017 Government Benefit Programs Federal Employees Group Life Insurance (FEGLI) Thrift Savings Plan (TSP) Civil Service Retirement System (CSRS) Federal Employees Retirement System (FERS) Final Review I. Not approved for advertising use

3 Government Benefit Programs and ESDTMK2174 Footprints Brainshark 12/2/2017 Benefit Programs Federal Employees Postal Workers Today we’re going to learn about the programs offered to federal employees and postal workers by the federal government.

4 Government Benefit Programs and ESDTMK2174 Footprints Brainshark 12/2/2017 ? ? ? Benefits ? Many federal employees and postal workers don’t fully understand how these programs work or what benefits they’re entitled too.

5 Government Benefit Programs and ESDTMK2174 Footprints Brainshark 12/2/2017 Educate Prospects Program Options ESD Products By learning about these programs, you can help educate prospects on their options with these programs and our products.

6 TMK2174 Footprints BrainsharkFEGLI TMK2174 Footprints Brainshark 12/2/2017 Federal Employees Group Life Insurance Federal Employees Group Life Insurance, or FEGLI, is the federal government’s group life insurance program for its employees.

7 TMK2174 Footprints BrainsharkFEGLI TMK2174 Footprints Brainshark 12/2/2017 Federal Employees Group Life Insurance While offered by the federal government, it’s underwritten by Metropolitan Life. This optional coverage is available to all government employees including postal service workers.

8 TMK2174 Footprints BrainsharkFEGLI 12/2/2017 FEGLI consists of five sections: Basic Insurance 1 Extra Benefit 2 Option A 3 Option B 4 Option C 5

9 TMK2174 Footprints BrainsharkBasic Insurance TMK2174 Footprints Brainshark 12/2/2017 Basic Insurance is Not Mandatory Required for purchase of Optional Plans ANNUAL WAGE COVERAGE Coverage based on Annual Wages Coverage increases as wages increases Automatic unless Declined in Writing by the end of the first pay period

10 TMK2174 Footprints BrainsharkBasic Insurance TMK2174 Footprints Brainshark 12/2/2017 100% Coverage Age 65 or Retirement Coverage peaks at age sixty-five or retirement, whichever comes first.

11 TMK2174 Footprints BrainsharkBasic Insurance TMK2174 Footprints Brainshark 12/2/2017 100% Coverage Age 65 or Retirement At the end of the month following the employee’s sixty-fifth birthday or retirement, coverage begins to decrease.

12 TMK2174 Footprints BrainsharkBasic Insurance TMK2174 Footprints Brainshark 12/2/2017 – 75% 3.7 Years 100% Coverage Age 65 or Retirement Coverage decreases over the next three-point-seven years until it reduces to twenty-five percent of the value at age sixty-five and freezes.

13 TMK2174 Footprints BrainsharkBasic Insurance 12/2/2017 – 75% – 50% – 0% 3.7 Years 100% Coverage + + PREMIUM Age 65 or Retirement + PREMIUM Employees can elect either a fifty percent reduction or no reduction. Both of these require an increased premium. If no reduction is elected, the seventy-five percent reduction is used.

14 Accidental Death and DismembermentTMK2174 Footprints Brainshark Accidental Death and Dismemberment 12/2/2017 Included at No Additional Cost 2+ Limbs, Both Eyes Double Indemnity for Accidental Death Full Benefit Payment for Accidental Loss of Eyesight 1 Limb, 1 Eye Payment for Accidental Loss of One or More Limbs 1/2 Benefit

15 TMK2174 Footprints BrainsharkCoverage Example TMK2174 Footprints Brainshark 12/2/2017 Annual Salary +$2,000 Coverage Amount To calculate how much Basic Insurance someone qualifies for, round their annual salary to the next highest thousand and add two thousand dollars.

16 TMK2174 Footprints BrainsharkCoverage Example TMK2174 Footprints Brainshark 12/2/2017 $39,200 $40,000 +$2,000 $42,000 For example, John Doe purchases the Basic Insurance at age thirty-five and he earns this amount annually. Next, we round John’s annual wage to the nearest thousand and add two thousand dollars. This gives us his total insurance coverage amount at age thirty-five.

17 TMK2174 Footprints BrainsharkCoverage Example TMK2174 Footprints Brainshark 12/2/2017 – 75% $80,000 3.7 Years Age 65 or Retirement $20,000 Remember, Basic Insurance coverage increases until age sixty-five or when the employee retires. Then, the insurance coverage amount decreases until it is twenty-five percent of the coverage amount. By age sixty-five, John now has eighty thousand dollars in coverage. In the next three-point-seven years, his coverage will decrease to twenty thousand dollars. This decrease comes at a time when John will most likely need the death benefits. Remember, Basic Insurance coverage increases until age sixty-five or when the employee retires. Then, the insurance coverage amount decreases until it is twenty-five percent of the coverage amount. By age sixty-five, John now has eighty thousand dollars in coverage. In the next three-point-seven years, his coverage will decrease to twenty thousand dollars. This decrease comes at a time when John will most likely need the death benefits.

18 Basic Insurance PremiumsTMK2174 Footprints Brainshark Basic Insurance Premiums 12/2/2017 Postal Workers Premium for Basic Insurance is free for postal workers, but not federal employees. Free Federal Employees The premium for federal employees is this much biweekly. 15 / $1,000 Biweekly

19 Basic Insurance PremiumsTMK2174 Footprints Brainshark 12/2/2017 So John’s premium for forty-two thousand dollars of coverage is this biweekly amount. Since premium is based on coverage and coverage is based on wages, premiums increase as coverage increases. At sixty-five or retirement, the employee no longer pays premiums. John Doe at age 35 $42,000 Coverage $6.30 Biweekly Premium John Doe at age 65 $82,000 Coverage $12.30 Biweekly Premium No Premiums at Age 65 / Retirement* * Assuming either 75% reduction is elected or no election is made

20 TMK2174 Footprints BrainsharkBasic Insurance Recap TMK2174 Footprints Brainshark 12/2/2017 Basic Insurance is not mandatory, but necessary if the employee wants to purchase other optional coverage. Basic Insurance Not Mandatory Required for Optional Coverage

21 TMK2174 Footprints BrainsharkBasic Insurance Recap TMK2174 Footprints Brainshark 12/2/2017 Coverage Wages Rounded Up Plus $2,000 Coverage is determined by rounding the employee’s wages to the next highest thousand and adding two thousand dollars.

22 TMK2174 Footprints BrainsharkBasic Insurance Recap TMK2174 Footprints Brainshark 12/2/2017 Coverage starts to decrease at sixty-five or retirement. Coverage Decrease Age 65 Retirement

23 TMK2174 Footprints BrainsharkBasic Insurance Recap TMK2174 Footprints Brainshark 12/2/2017 Premium 15 / $1,000 Coverage Biweekly Free for Postal Workers The premium is biweekly and increases as coverage does. Basic Insurance is free for postal workers.

24 TMK2174 Footprints BrainsharkBasic Insurance Recap 12/2/2017 Accidental death and dismemberment benefit is added at no additional cost. AD&D Included with no additional cost

25 TMK2174 Footprints BrainsharkExtra Benefit Amount 12/2/2017 Employees who participate in the Federal Employees Group Life Insurance program are required to have Basic Insurance. There are additional voluntary features that can be added to Basic Insurance. Basic Insurance 1 Extra Benefit 2 Option A 3 Option B 4 Option C 5

26 TMK2174 Footprints BrainsharkExtra Benefit Amount TMK2174 Footprints Brainshark 12/2/2017 Extra Benefit Amount No Premium Automatically Added to Basic Insurance Now let’s discuss the Extra Benefit Amount option under the program. The Extra Benefit Amount option is free and automatically added when Basic Insurance is purchased.

27 TMK2174 Footprints BrainsharkExtra Benefit Amount TMK2174 Footprints Brainshark 12/2/2017 Extra Benefit Amount Wage (rounded to nearest thousand) + $2,000 Available for Employees Under 45 Coverage is calculated the same way as Basic Insurance. This program is available for employees under age forty-five.

28 TMK2174 Footprints BrainsharkExtra Benefit Amount TMK2174 Footprints Brainshark 12/2/2017 Extra Benefit Amount Doubles Basic Insurance If Employee 35 and Younger AD&D NOT included It doubles the amount of Basic Insurance if the employee is thirty-five and younger. Accidental Death and Dismemberment is not included in the Extra Benefit Amount.

29 Extra Benefit Amount CoverageTMK2174 Footprints Brainshark 12/2/2017 Unlike Basic Insurance, the Extra Benefit Amount doesn’t increase. Coverage under the Extra Benefit Amount option starts reducing at thirty-six. 35 36

30 Extra Benefit Amount CoverageTMK2174 Footprints Brainshark Extra Benefit Amount Coverage 12/2/2017 35 36 37 38 39 40 41 42 43 44 Over the next ten years, coverage will reduce by ten percent of the original amount annually.

31 Extra Benefit Amount CoverageTMK2174 Footprints Brainshark 12/2/2017 BENEFIT TERMINATES 35 36 37 38 39 40 41 42 43 44 45 By forty-five no coverage remains and the benefit terminates.

32 TMK2174 Footprints BrainsharkOption A TMK2174 Footprints Brainshark 12/2/2017 Option A Option A Total Coverage Basic Insurance Now let’s review Option A. Option A provides an additional ten thousand dollars of coverage on top of any existing coverage.

33 TMK2174 Footprints BrainsharkOption A TMK2174 Footprints Brainshark 12/2/2017 Option A Option A + $10,000 Total Coverage $52,000 Basic Insurance $42,000 So if John Doe purchased Option A, he would have this much including his existing coverage.

34 TMK2174 Footprints BrainsharkOption A TMK2174 Footprints Brainshark 12/2/2017 – 75% $10,000 3.7 Years Age 65 or Retirement $2,500 Coverage for Option A decreases like Basic Insurance starting at sixty five. Coverage will decrease over the next three point seven years until only twenty-five percent remains. By the time John is sixty-nine, he will have only twenty-five hundred dollars of Option A coverage left. Coverage for Option A decreases like Basic Insurance starting at sixty five. Coverage will decrease over the next three point seven years until only twenty-five percent remains. By the time John is sixty-nine, he will have only twenty-five hundred dollars of Option A coverage left.

35 TMK2174 Footprints BrainsharkOption A Premiums 12/2/2017 Popular due to low initial premiums at younger ages Premiums vary by age Premiums increase with age Premium list in Federal Employees Almanac provided to you in your initial supply kit

36 TMK2174 Footprints BrainsharkOption A Premiums 12/2/2017 $10,000 Age 65 or Retirement The premium increases as the employee ages and stops at sixty-five.

37 TMK2174 Footprints BrainsharkOption A Premiums 12/2/2017 3.7 Years $10,000 Age 65 or Retirement $1,500 $1,500 Between the ages of thirty-five to sixty-five, the average employee pays approximately fifteen hundred dollars.

38 TMK2174 Footprints BrainsharkOption A Premiums TMK2174 Footprints Brainshark 12/2/2017 3.7 Years $10,000 Age 65 or Retirement $2,500 $1,500 $1,500 So if John lives past age sixty-nine, he will have paid approximately fifteen hundred dollars for twenty-five hundred dollars of coverage.

39 TMK2174 Footprints BrainsharkCombined Premiums TMK2174 Footprints Brainshark 12/2/2017 Coverage Annual Premium Weekly Amount Type Basic Insurance $42,000 $6.30 $163.80 Extra Benefit Amount $42,000 $0 $0 Age 35 Option A $10,000 $0.40 $10.40 Total $94,000 $6.70 $174.20 Let’s say our example employee John signed up for Basic Insurance, Extra Benefit Amount, and Option A at age thirty-five. When he enrolls, John will have this much coverage under each for this much premium. After one full calendar, John would have paid this much in premiums for this much coverage. $20,000 65> $2,500 $22,500 * Assumes annual raises in salary Premiums based on 2013 Federal Employees Almanac, non-postal worker

40 TMK2174 Footprints BrainsharkCombined Premiums 12/2/2017 Coverage Annual Premium Weekly Amount Type Basic Insurance $312 $12.00 $80,000 Extra Benefit Amount $0 Age 64* Option A $156 $6.00 $10,000 Total $468 $18.00 $90,000 By the time John is sixty-five, he will be paying a higher premium for less coverage than he had at thirty-five. After the policy anniversary after John turns sixty-five, the coverage for both Basic Insurance and Option A will each reduce to twenty-five percent of the original amount. $20,000 65> $2,500 $22,500 * Assumes annual raises in salary Premiums based on 2013 Federal Employees Almanac, non-postal worker

41 TMK2174 Footprints BrainsharkRecap 12/2/2017 Extra Benefit Amount The Extra Benefit Amount option has automatic enrollment and its coverage is determined the same way as Basic Insurance. Coverage for the Extra Benefit Amount starts decreasing at age thirty-six and is no-cost for the employee. Enrollment Type Coverage Coverage Decrease Premium Automatic if Basic Insurance selected Wages (rounded) + $2,000 Age 36 Free

42 TMK2174 Footprints BrainsharkRecap 12/2/2017 Option A Option A has voluntary enrollment and provides coverage in addition to existing coverage. Premiums vary by age. Enrollment Type Coverage Coverage Decrease Premium Voluntary + $10,000 to existing coverage Age 65 Varies by Age

43 TMK2174 Footprints BrainsharkIt’s important to know the how these plans basically function because your customers may have these plans and will expect you to know how our products can help fill in the gaps with their existing coverage. TMK2174 Footprints Brainshark 12/2/2017 Basic Insurance Extra Benefit Amount Option A Enrollment Type Coverage Coverage Decrease Premium Not Mandatory; Required for Optional Coverage Automatic if Basic Insurance selected Voluntary Wages (rounded) + $2,000 Wages (rounded) + $2,000 + $10,000 to existing coverage Age 65 or retirement Age 36 Age 65 15 / $1,000 Biweekly; Free for Postal Workers Free Varies by Age

44 TMK2174 Footprints BrainsharkOption B TMK2174 Footprints Brainshark 12/2/2017 Option B Wage $40,000 $39,500 Now let’s review Option B. To determine the coverage amount, round the employee’s annual wage to the next highest thousand.

45 TMK2174 Footprints BrainsharkOption B TMK2174 Footprints Brainshark 12/2/2017 Option B Wage Units Coverage $40,000 2 3 4 1 5 $40,000 $80,000 $120,000 $160,000 $200,000 $39,500 Then, multiply by the amount the employee chooses as shown here. These are known as units. A unit is the employee’s rounded annual wage.

46 TMK2174 Footprints BrainsharkOption B Coverage 12/2/2017 100% Coverage Age 65 0% Coverage As with Basic Insurance, Option B coverage can increase based on salary until age sixty-five. 50 Months A At this point coverage decreases over the next fifty months until it reaches zero and coverage terminates.

47 TMK2174 Footprints BrainsharkOption B Coverage TMK2174 Footprints Brainshark 12/2/2017 The employee may continue coverage, however this is rarely done as premiums continue to increase dramatically as individual ages. + + PREMIUM + PREMIUM PREMIUM

48 TMK2174 Footprints BrainsharkOption B Premiums TMK2174 Footprints Brainshark 12/2/2017 Premiums Age Premiums for Option B vary by age and amount of coverage. As coverage increases, so does the premium. Check the Federal Employees Almanac for details on premium.

49 TMK2174 Footprints BrainsharkOption B Premiums TMK2174 Footprints Brainshark 12/2/2017 Premiums Age Age 65 At age sixty-five, the employee no longer pays premiums and the coverage amount decreases. Unless the employee chooses to continue coverage at the same coverage amount.

50 TMK2174 Footprints BrainsharkOption C TMK2174 Footprints Brainshark 12/2/2017 Option C Family Coverage Spouse Now let’s review Option C. Option C provides family coverage. Dependent Children Unmarried Under Age 22 Eligible family members are the spouse of the employee and unmarried, dependent children under twenty-two.

51 TMK2174 Footprints BrainsharkOption C Coverage TMK2174 Footprints Brainshark 12/2/2017 Option C Units Coverage for Option C is sold in units. 2 3 4 1 5

52 TMK2174 Footprints BrainsharkOption C Coverage TMK2174 Footprints Brainshark 12/2/2017 Option C Each unit is five thousand dollars for the spouse and twenty-five hundred dollars for each child. Spouse Each Child $5,000 $2,500 $10,000 $5,000 $15,000 $7,500 $20,000 $10,000 $25,000 $12,500

53 TMK2174 Footprints BrainsharkOption C Coverage 12/2/2017 Option C Units Spouse Each Child 2 3 4 1 5 $5,000 $2,500 $10,000 $5,000 $15,000 $7,500 $20,000 $10,000 Employees can purchase up to five units for their spouse and each child. The final amounts will look like this. $25,000 $12,500 Employees can purchase up to five units for their spouse and each child. The final amounts will look like this.

54 TMK2174 Footprints BrainsharkOption C Coverage TMK2174 Footprints Brainshark 12/2/2017 100% Coverage 50 Months Age 65 0% Coverage Coverage for Option C remains steady until the employee turns sixty-five. Then, Option C coverage decreases the same way Option B does. Coverage for Option C terminates within fifty months after age sixty-five unless the employee pays full premiums increasing by age.

55 TMK2174 Footprints BrainsharkOption C Coverage TMK2174 Footprints Brainshark 12/2/2017 + + PREMIUM Age of the employee is used for premium calculations. + PREMIUM PREMIUM

56 TMK2174 Footprints BrainsharkOption C Premiums TMK2174 Footprints Brainshark 12/2/2017 Premiums Age Employees pay the full cost of Option C. Premiums vary by age and number of units. See the Federal Employees Almanac for details on premium amounts.

57 TMK2174 Footprints BrainsharkOption C Premiums TMK2174 Footprints Brainshark 12/2/2017 Premiums Age Age 65 The employee stops paying premiums at age sixty-five unless the employee chooses to continue coverage.

58 Optional Limited ReductionTMK2174 Footprints Brainshark Optional Limited Reduction 12/2/2017 Optional Limited Reduction Federal Employees Postal Workers There is a way for federal employees and postal workers to prevent their coverage from decreasing or terminating past age sixty-five. This option is called Optional Limited Reduction. Age 65

59 Optional Limited ReductionTMK2174 Footprints Brainshark 12/2/2017 Optional Limited Reduction Age 65 50% Reduction Option Premium No Reduction Option Premium Basic Insurance Premium Option B or C Premium Basic Insurance Premium Stops Employees with Basic Insurance pay an increased premium until age sixty-five for a fifty percent or no reduction option with a premium reduction thereafter. Employees with Options B or C pay increasing premiums based on age.

60 TMK2174 Footprints BrainsharkFEGLI Recap TMK2174 Footprints Brainshark 12/2/2017 Enrollment in Option B is voluntary if Basic Insurance is elected. Coverage for Option B is determined by rounding the employee’s wages to the next highest thousand and multiplying by the number of units. Coverage starts to decrease at age sixty-five. Premiums for Option B vary by age and coverage amount. Option B Enrollment Type Coverage Coverage Decrease Premium Voluntary Wages (rounded) × Units (1, 2, 3, 4, or 5) Age 65 Varies by Age and Coverage Amount

61 TMK2174 Footprints BrainsharkFEGLI Recap TMK2174 Footprints Brainshark 12/2/2017 Enrollment in Option C is voluntary if Basic Insurance is elected. Coverage for Option C is available for the spouse of up to five units of five thousand dollars and for each child of up to five units of twenty-five hundred dollars. Coverage starts to decrease at age sixty-five. Option C premiums vary by age and number of units. Option C Enrollment Type Coverage Coverage Decrease Premium Voluntary Spouse: $5,000 × Units Child: $2,500 × Units Age 65 Varies by Age and Number of Units (up to 5)

62 TMK2174 Footprints BrainsharkFEGLI Recap TMK2174 Footprints Brainshark 12/2/2017 Option A Basic Insurance Extra Benefit Amount Option C Option B Enrollment Type Coverage Coverage Decrease Premium Voluntary Not Mandatory; Required for Optional Coverage Automatic if Basic Insurance selected Voluntary Voluntary + $10,000 to existing coverage Wages (rounded) + $2,000 Wages (rounded) × Units (1, 2, 3, 4, or 5) Spouse: $5,000 × Units Child: $2,500 × Units Age 65 Age 65 or retirement Age 36 Age 65 Age 65 Varies by Age 15 / $1,000 Biweekly; Free for Postal Workers Free Varies by Age and Coverage Amount Varies by Age and Number of Units (up to 5)

63 TMK2174 Footprints BrainsharkGaps in FEGLI TMK2174 Footprints Brainshark 12/2/2017 Coverage amount high during working years Reduces after retirement Average life expectancy: 78.7* Coverage for the Federal Employees Group Life Insurance program is high while the employee is working but reduces after retirement when the death rate is higher. Not to mention these options don’t provide cash value accumulation. * Centers for Disease Control and Prevention, Feb. 2013

64 TMK2174 Footprints BrainsharkGaps in FEGLI TMK2174 Footprints Brainshark 12/2/2017 Private Life Insurance Can Offer: More Benefits Level Benefit Amounts Cash Value Accumulation Guaranteed Policy Value If the employees chose private life insurance instead, they could gain more benefits, cash value accumulation with whole life policies, their benefit amount won’t decrease at a certain age, and policy values are guaranteed as long as premiums are paid on time. * Centers for Disease Control and Prevention, Feb. 2013

65 Government Benefits ProgramsTMK2174 Footprints Brainshark 12/2/2017 Government Benefits Programs Federal Employees Group Life Insurance (FEGLI) Thrift Savings Plan (TSP) Civil Service Retirement System (CSRS) Federal Employees Retirement System (FERS) Final Review II.

66 Thrift Savings Plan (TSP)TMK2174 Footprints Brainshark Thrift Savings Plan (TSP) 12/2/2017 Established in 1986 Part of the Federal Employees Retirement System The Thrift Savings Plan, or TSP, was established in 1986 as a part of the Federal Employees Retirement System.

67 Thrift Savings Plan (TSP)TMK2174 Footprints Brainshark 12/2/2017 Also available to Civil Service Retirement System participants However, the Thrift Savings Plan is available to Civil Service Retirement System members as well. We will discuss both of these plans later in the training. Your customers will look to you as a resource about their plan and how our products can help fill any gaps in their coverage.

68 TMK2174 Footprints BrainsharkContributions TMK2174 Footprints Brainshark 12/2/2017 Employees’ Voluntary Contribution Choice Contribution Amount The Thrift Savings Plan is voluntary and employees can contribute as much as they choose as long as it is under the maximum limit set by the IRS. Maximum Contribution in 2015: $18,000

69 TMK2174 Footprints BrainsharkContributions TMK2174 Footprints Brainshark 12/2/2017 Employees’ Voluntary Contribution Employees can choose to contribute a percentage of their salary or set whole dollar amounts. Percentage of Salary Whole Dollar Amounts These contributions are available on a pre-tax basis.

70 TMK2174 Footprints BrainsharkContributions TMK2174 Footprints Brainshark 12/2/2017 Employees’ Voluntary Contribution 2012 R ROTH 2012 Af AFTER-TAX There are also Roth plans available that allow for after-tax contributions with no tax on earnings at withdrawal.

71 TMK2174 Footprints BrainsharkMatching 12/2/2017 Employees receive a dollar for dollar match on their investments on the first three percent of pay invested and fifty cents on the dollar for the next two percent of pay invested. The government will contribute a maximum of five percent. $1 50 2% $1 $1 3% EMPLOYEE GOVERNMENT

72 TMK2174 Footprints BrainsharkMatching TMK2174 Footprints Brainshark 12/2/2017 Civil Service Retirement System No Contribution Federal Employee Retirement System 1% Contribution Federal Employee Retirement System members receive an automatic one percent contribution from the government. Even though Civil Service Retirement System participants can enroll in the Thrift Savings Plan, they don’t receive any contributions from the government.

73 TMK2174 Footprints BrainsharkInvestment Funds 12/2/2017 Government Securities Investment Fund G Small Capitalization Stock Index Investment Fund S Common Stock Index Investment Fund C International Stock Index Investment Fund I Fixed Income Index Investment Fund F One of the Lifecycle Funds Diversity among G, C, F, S, and I L Employees can make contributions to one or more of these funds.

74 TMK2174 Footprints BrainsharkCatch-Up Provision TMK2174 Footprints Brainshark 12/2/2017 Available for Employees 50 and Older The Catch-Up Provision is available only for employees age fifty and older. This provision allows employees to make additional investments from their basic pay for each year they are in the Thrift Savings Plan. Employees elect the contribution amount in whole dollars each year. Elections don’t rollover from the previous year.

75 TMK2174 Footprints BrainsharkCatch-Up Provision 12/2/2017 Available for Employees 50 and Older Your customers over fifty may choose to take advantage of this provision. If they’re contributing money to this provision, it will directly affect how much coverage they can afford with our Company. Review the Federal Employees Almanac for details on eligibility and contributions. Age 50+

76 TMK2174 Footprints BrainsharkLoans and Payments TMK2174 Footprints Brainshark 12/2/2017 Loan Employees are allowed to take out loans in the Thrift Savings Plan.

77 TMK2174 Footprints BrainsharkLoans and Payments TMK2174 Footprints Brainshark 12/2/2017 Payment Options Single Payment Transfer to IRA Income Options Transfer to Spouse Employees can also select a single payment at retirement, transfer the funds to an IRA, or choose from other different income options. Employees can also elect to have their retirement benefits go to their spouse after their death

78 TMK2174 Footprints BrainsharkLoans and Payments TMK2174 Footprints Brainshark 12/2/2017 Payment Options Single Payment Transfer to IRA Income Options Transfer to Spouse It’s important to know what kind of payments the customer will be receiving after retirement because it will determine the amount and type of coverage they will be able to afford with our Company.

79 TMK2174 Footprints BrainsharkLoans and Payments 12/2/2017 Visit this website for additional details about the Thrift Savings Plan or review the Federal Employees Almanac. Employees can also select a single payment at retirement, transfer the funds to an IRA, or choose from other different income options. Employees can also elect to have their retirement benefits go to their spouse after their death. It’s important to know what kind of payments the customer will be receiving after retirement because it will determine the amount and type of coverage they will be able to afford with our Company. Visit this website for additional details about the Thrift Savings Plan or review the Federal Employees Almanac.

80 Government Benefits ProgramsTMK2174 Footprints Brainshark 12/2/2017 Government Benefits Programs Federal Employees Group Life Insurance (FEGLI) Thrift Savings Plan (TSP) Civil Service Retirement System (CSRS) Federal Employees Retirement System (FERS) Final Review III.

81 Federal Retirement SystemsTMK2174 Footprints Brainshark 12/2/2017 Civil Service Retirement System Federal Employees Retirement System CSRS FERS All federal employees are covered by one of two government retirement systems with few exceptions. These two programs are Federal Employee Retirement System, or FERS, and the Civil Service Retirement System, or CSRS.

82 Federal Retirement SystemsTMK2174 Footprints Brainshark 12/2/2017 Civil Service Retirement System Federal Employees Retirement System December 31, 1983 January 1, 1984 Employees hired after December thirty-first, nineteen-eighty-three are covered by the Federal Employee Retirement System. Employees hired before nineteen-eighty-four are covered by the Civil Service Retirement System.

83 TMK2174 Footprints BrainsharkCSRS TMK2174 Footprints Brainshark 12/2/2017 Guaranteed Annuity at retirement & Length of Service Average Annual Pay 3 Consecutive Years Let’s begin with the Civil Service Retirement System. This program provides a guaranteed annuity at retirement. The annuity benefit is determined by the employee’s length of service plus their highest average annual pay for three consecutive years.

84 TMK2174 Footprints BrainsharkCSRS TMK2174 Footprints Brainshark 12/2/2017 Guaranteed Annuity at retirement & 30 Years Service $60,000 Average $33,750 Basic Annuity Amount* So let’s say John Doe has worked for the government for 30 years when he retires and his highest average annual pay is sixty thousand dollars. Using the equation outlined in the Federal Employees Almanac, John’s retirement benefit will be this much. * Example pulled from Federal Employee Almanac, 2012 ed.

85 Spouse Survivor BenefitTMK2174 Footprints Brainshark 12/2/2017 Employee Benefit Spouse Survivor Benefit 55% Upon enrollment, employees can choose whether or not payments should be paid to their spouse after they die. The spouse would receive fifty-five percent of the benefit.

86 Spouse Survivor BenefitTMK2174 Footprints Brainshark Spouse Survivor Benefit 12/2/2017 30 Years Service & $60,000 Average John’s monthly income: $2,554 Jane would receive: $1,404 In our previous example, John had thirty years of service and sixty-thousand dollars of average annual pay. John would receive this much in monthly income. His wife, Jane, would receive this much after John has passed.

87 Cost of Spouse Survivor BenefitTMK2174 Footprints Brainshark 12/2/2017 Employees have to pay for the spouse survivor benefit. The actual cost is determined by a certain percentage and is deducted from the employee’s gross retirement income. Up to $3,600 2.5% 10% Employee Gross Retirement Income

88 Cost of Spouse Survivor BenefitTMK2174 Footprints Brainshark 12/2/2017 So the employee receives less benefits while he or she is alive. John’s Gross Monthly Income: $2,554 Spouse Survivor Benefit Cost (2.5%): $64 John’s Net Monthly Income: $2,490

89 TMK2174 Footprints BrainsharkCSRS Offset TMK2174 Footprints Brainshark 12/2/2017 All Qualifications Must be Met The Civil Service Retirement System Offset option is available to employees who were originally hired before 1984 and were covered by CSRS, but left federal service and were later rehired after 1983. Employees must have been covered by the program for at least five years to qualify for the offset at rehire. Originally Hired Before 1984 Originally Covered By CSRS Left Federal Service Rehired After 1983 Must Have Been Covered by CSRS for 5 Years Upon Rehire

90 TMK2174 Footprints BrainsharkCSRS Offset TMK2174 Footprints Brainshark 12/2/2017 Upon Retirement Upon retirement, the value of the employee’s Social Security benefits are subtracted from the Civil Service Retirement System benefits. Social Security Benefits CSRS Benefits CSRS Offset

91 TMK2174 Footprints BrainsharkCSRS Details 12/2/2017 Now let’s quickly review the major issues with this program. First, once employees opt into this program they can never dis-enroll or change the program. They are locked in for life. Once Enrolled Cannot Disenroll

92 TMK2174 Footprints BrainsharkCSRS Details 12/2/2017 Also, if they choose the spouse survivor benefit and their spouse dies first, the employee loses the money paid towards the benefit. The employee can’t regain the lost income. Spouse Survivor Benefit Cannot Regain Lost Income

93 TMK2174 Footprints BrainsharkCSRS Details TMK2174 Footprints Brainshark 12/2/2017 Finally, the gross retirement income is set. Employees can’t adjust the amount to fit their needs. Gross Retirement Income Cannot Adjust

94 TMK2174 Footprints BrainsharkOur Products Can Help TMK2174 Footprints Brainshark 12/2/2017 Can Adjust Needs Change as Level Benefits So how can our products help? Private whole life insurance offers level death benefits that the employee determines. The employee can also adjust the death benefit amount as their needs change.

95 TMK2174 Footprints BrainsharkOur Products Can Help TMK2174 Footprints Brainshark 12/2/2017 Private whole life insurance accumulates cash value the employee can use any way they see fit. Accumulates Cash Value Should the employee cancel their life insurance policy, they can keep the accumulated cash value.

96 TMK2174 Footprints BrainsharkOur Products Can Help TMK2174 Footprints Brainshark 12/2/2017 Finally, with private whole life insurance the employee has the ability to change the beneficiary as necessary or even name a secondary beneficiary. Beneficiary New Beneficiary Secondary Beneficiary

97 Government Benefits ProgramsTMK2174 Footprints Brainshark 12/2/2017 Government Benefits Programs Federal Employees Group Life Insurance (FEGLI) Thrift Savings Plan (TSP) Civil Service Retirement System (CSRS) Federal Employees Retirement System (FERS) Final Review IV.

98 TMK2174 Footprints BrainsharkFERS TMK2174 Footprints Brainshark 12/2/2017 Federal Employees Retirement System + Medicare January 1, 1984 + Social Security Basic Component Now let’s review the Federal Employees Retirement System. This program covers employees hired after December 31, Employees under this program are also covered under Medicare and Social Security and are subject to the same contributions for those two programs. Social Security is a basic component of this program.

99 TMK2174 Footprints BrainsharkFERS Income TMK2174 Footprints Brainshark 12/2/2017 Guaranteed Annuity at retirement The retirement income is determined by the employee’s age times length of service times their highest average annual pay for three consecutive years. Age (%) × Length of Service × Average Annual Pay 3 Consecutive Years

100 TMK2174 Footprints BrainsharkFERS Income TMK2174 Footprints Brainshark 12/2/2017 Guaranteed Annuity at retirement So let’s say John Doe has worked for the government for 30 years when he retires and his highest average annual pay is sixty thousand dollars. John’s monthly income at retirement would be this much. Age (8.33%) × 30 Years × $60,000 $1,500 Basic Annuity Amount* * Example pulled from Federal Employee Almanac, 2012 ed.

101 Spouse Survivor BenefitTMK2174 Footprints Brainshark 12/2/2017 Employee Benefit Spouse Survivor Benefit 50% Upon enrollment, employees can choose whether or not payments should be sent to their spouse after they die. The spouse would receive fifty percent of the benefit.

102 Spouse Survivor BenefitTMK2174 Footprints Brainshark 12/2/2017 30 Years Service & $60,000 Average John’s monthly income: $1,350 Jane would receive: $675 In our previous example, John had thirty years of service and sixty-thousand dollars of average annual pay. John would receive this much in monthly income. His wife, Jane, would receive this much after John has passed.

103 Cost of Spouse Survivor BenefitTMK2174 Footprints Brainshark Cost of Spouse Survivor Benefit 12/2/2017 Employees have to pay for the spouse survivor benefit. The actual cost is determined by a certain percentage and is deducted from the employee’s gross retirement income. Employee Gross Retirement Income 10%

104 Cost of Spouse Survivor BenefitTMK2174 Footprints Brainshark Cost of Spouse Survivor Benefit 12/2/2017 So the employee receives less benefits while he or she is alive. John’s Gross Monthly Income: $1,500 Spouse Survivor Benefit Cost (10%): $15 John’s Net Monthly Income: $1,350

105 TMK2174 Footprints BrainsharkFERS and TSP 12/2/2017 Under the Federal Employees Retirement System the Government contributes one percent of the employee’s salary to the Thrift Savings Plan. Go back and review the Thrift Savings Plan module if you need a refresher on the Thrift Savings Plan. Federal Employees Retirement System 1% Matching 1% EMPLOYEE GOVERNMENT

106 TMK2174 Footprints BrainsharkCSRS Details 12/2/2017 Now let’s quickly review some details about this program. First, once employees opt into this program they can never dis-enroll or change the program. They are locked in for life. Once Enrolled Cannot Disenroll

107 TMK2174 Footprints BrainsharkCSRS Details 12/2/2017 Also, if they choose the spouse survivor benefit and their spouse dies first, the employee loses the money paid towards the benefit. The employee can’t regain the lost income. Spouse Survivor Benefit Cannot Regain Lost Income

108 TMK2174 Footprints BrainsharkCSRS Details TMK2174 Footprints Brainshark 12/2/2017 Finally, the gross retirement income is set. Employees can’t adjust the amount to fit their needs. Gross Retirement Income Cannot Adjust

109 TMK2174 Footprints BrainsharkOur Products Can Help TMK2174 Footprints Brainshark 12/2/2017 Can Adjust Needs Change as Level Benefits So how can our products help? Private whole life insurance offers level death benefits that the employee determines. The employee can also adjust the death benefit amount as their needs change.

110 TMK2174 Footprints BrainsharkOur Products Can Help TMK2174 Footprints Brainshark 12/2/2017 Private whole life insurance accumulates cash value the employee can use any way they see fit. Accumulates Cash Value Should the employee cancel their life insurance policy, they can keep the accumulated cash value.

111 TMK2174 Footprints BrainsharkOur Products Can Help TMK2174 Footprints Brainshark 12/2/2017 Finally, with private whole life insurance the employee has the ability to change the beneficiary as necessary or even name a secondary beneficiary. Beneficiary New Beneficiary Secondary Beneficiary

112 TMK2174 Footprints Brainshark12/2/2017 Remember, many government employees have a poor understanding of all aspects of Federal Employees Group Life Insurance, Thrift Savings Plan, and their pension plan. You can explain all of their options and help them make the choice that best suits their needs. Not approved for advertising use TMK2483

113 Government Benefits ProgramsTMK2174 Footprints Brainshark 12/2/2017 Please complete the TMK2483 ESD New Hire Government Benefit Programs Quiz to receive credit for this training module. For optimal results of the quiz website, please use Google Chrome. If you do not have Google Chrome on your computer, you can download it for free here.  Government Benefits Programs Training Not approved for advertising use TMK2483