Life insurance vs. survivor annuity


Q. I am a postal worker under CSRS. I am 47 years old with 28 years in the Postal Service. I was told it would be wise not to take the survivor annuity for my wife and instead take out a life insurance policy on myself. In order to keep her covered under health insurance in the event of my death, I was told I must elect some kind of reduced annuity for her. What is the minimum annuity I can elect for her that will keep her health-insured if I die before she does? Is it a good idea to go with a life insurance policy instead of a full survivor annuity?

A. Let’s get one thing straight. It isn’t your decision to make. By law, you are required to elect a full survivor annuity for your wife unless she agrees in writing to a lesser amount or none at all. Because you are a CSRS employee, with her approval you could elect any amount from $1 a year up. If the amount you agreed to didn’t cover the Federal Employees Health Benefits premiums, she could pay the difference directly to the Office of Personnel Management. However, before the two of you agree to less than a full survivor annuity, consider what my Federal Times colleague Mike Miles has frequently pointed out: Taking out an insurance policy instead of electing a survivor annuity is a bad idea. Any cost-benefit analysis you can do will reveal that nothing matches the long-term value of a survivor annuity, with its annual adjustments to keep pace with inflation.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to


  1. I’m told by my HR department that while my survivor can elect a benefit of $1.00/year, OPM will take a minimum of $1.00/month or $12 annually from my CSRS annuity. So HR recommends that my survivor elect $480.00/year since OPM will still take a $1.00/month but provide a $22/month survivor benefit.

    $480.00 x .55 = $264.00 which is $22.00/month. My cost is .025 x $480.00 = $12.00/year or $1.00/month

    Can you point me to the OPM guidance that states OPM must take a minimum of $1.00/month?

    • I asked OPM for an answer to your question but never heard back from them, even after I followed up. My guess is that their system is only programmed to handled whole dollars. Therefore, they could deduct $1 a month from your annuity, but nothing less than that.

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