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Frequently Asked Questions Retirement

What is an insurable interest survivor benefit election?

If you are in good health and you retire for reasons other than disability, you may elect to provide a survivor annuity to someone with an insurable interest. You can elect to provide an insurable interest benefit and the maximum benefit for a spouse or an ex-spouse. Spousal consent is not required. However, if you are married and elect an insurable interest benefit for your spouse, spousal consent is required.

If you elect an insurable interest benefit, you are responsible for arranging for and paying the cost of any medical examination required to show you are in good health. A report of the medical examination should be included with your retirement application.

You can elect to provide an insurable interest annuity only for someone who has an insurable interest in you. "Insurable interest" is an insurance term which applies to someone who would reasonably expect to derive financial benefit from your continued life. For survivor benefit election purposes, an insurable interest is presumed to exist if you name as beneficiary of the insurable interest, any of the following individuals:

  • a spouse;
  • a blood or adopted relative closer than first cousins;
  • an ex-spouse;
  • a person to whom you are engaged to be married; or
  • a person with whom you are living in a relationship that would constitute a common-law marriage in a jurisdiction that recognizes common-law marriages.

If the person named is not one of the above, you should submit affidavits with your retirement application from one or more people with knowledge of the individual's insurable interest. The affidavits should state:

  • the relationship between you;
  • the extent to which the person named is dependent on you;
  • the reasons why the person named might reasonably expect to derive financial benefit from your continued life.

The reduction to provide an insurable interest benefit is computed as follows:

  • If the person named is older, the same age, or less than 5 years younger than the retiree, the reduction is 10 percent;
  • If the person named is 5 but less than 10 years younger than the retiree, the reduction is 15 percent;
  • If the person named is 10 but less than 15 years younger than the retiree, the reduction is 20 percent;
  • If the person named is 15 but less than 20 years younger than the retiree, the reduction is 25 percent;
  • If the person named is 20 but less than 25 years younger than the retiree, the reduction is 30 percent;
  • If the person named is 25 but less than 30 years younger than the retiree, the reduction is 35 percent; or
  • If the person named is 30 or more years younger than the retiree, the reduction is 40 percent.

The insurable interest automatically ends if the insurable interest dies, if you marry the insurable interest and elect to provide a spousal benefit, or if the named person is your spouse and you change your election to provide a spousal survivor benefit.

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