VRS Life Insurance Retirement System Review

The Virginia Retirement System, an independent state agency, administers defined benefit, defined contribution and hybrid plans along with other benefits for Virginia's public sector employees. They are headquartered in Richmond, Virginia.

VRS ranks as the 19^thlargest public or private pension fund in the U.S. and the 41^stlargest in the world, serving approximately 705,000 active and inactive members, retirees and beneficiaries. Active members include about 147,000 teachers, 108,000 political subdivision employees and 88,000 state employees. VRS paid out approximately $4.6 billion in benefits to more than 206,000 retirees and beneficiaries in fiscal year 2018. About 86 percent of VRS retirees and beneficiaries reside in Virginia.

Its Mission Statement:

“VRS delivers retirement and other benefits to Virginia public employees through sound financial stewardship and superior customer service.”

Its Vision Statement:

“To be the trusted leader in the delivery of benefits and services to those we serve.”

Basic Group Life Insurance

Benefits

If you are covered under the VRS Group Life Insurance Program, some basic group life insurance benefits will continue into retirement or if you are eligible to retire but defer retirement. Your coverage will end if you have not met the age and service requirements for retirement or you take a refund of your member contributions and interest.

Your coverage includes

• Death benefit equal to your compensation at retirement, rounded to the next highest thousand and then doubled. The provision that allows for payment of double the death benefit for accidental death ceases upon leaving employment. Dismemberment insurance also ceases upon leaving employment.
• If you have 20 or more years of service, your death benefit is equal to twice your highest annual compensation in your history of VRS-covered employment, even if your compensation is lower when you leave employment.
• Accelerated death benefit. If you are diagnosed with a terminal condition and have fewer than 12 months to live, you can withdraw part or all of your Basic Group Life Insurance coverage for any purpose. Any amount remaining in your plan is paid to your beneficiary.

Coverage

Your coverage begins to reduce on January 1 following one calendar year after your employment ends. You may end employment and defer retirement until a later date; however, the Group Life Insurance will begin reducing based on the last month of employment. The reduction rate is 25 percent each January 1 until it reaches 25 percent of the total life insurance benefit value at retirement. If you have at least 30 years of creditable service, your coverage cannot reduce below $8,279. This minimum will be increased annually based on the VRS Plan 2 cost-of-living adjustment calculation.

Optional Group Life Insurance Benefit

If you are enrolled in the Optional Group Life Insurance Program and meet the qualifications for retirement, you may continue a portion of your coverage upon leaving employment. You, as well as your spouse and dependent children, must have been continuously covered during the 60 months before you leave employment.

• You must elect to continue your coverage within 31 days of the last day of the month in which you leave employment.

• The amount of optional coverage eligible for continuation as a retiree may not be more than the level of coverage you had as an active employee.

• You may choose Option 1 for yourself (your compensation at retirement) or Option 2 (twice your compensation at retirement), not to exceed $300,000.

• Coverage for your spouse is half of the amount you choose for yourself.

• Coverage for your dependent children is $10,000 for each child.

• Optional life insurance amounts reduce by 25 percent every five years based on your age, beginning with your normal retirement age under your plan, until your coverage reaches 25 percent of what it was when you left employment.

• Coverage ends at age 80.

• Accidental death and dismemberment coverage ends upon leaving employment.

• Proof of good health will not be required. You will be billed for the premiums. 

  Final Thought...

  The VRS life insurance retirement plan can be great for a person that is not in good health because you do not have to prove good health to qualify.  Many older people may appreciate this because of health issues as we age.  However for the majority of Virginians, having your coverage reduce each year or having coverage ending at age 80 is not an attractive option.  It's best to have an experienced life insurance professional review your situation properly so that the best coverage is in place for you and your family. This is where I can help.  You can contact us at (804)551-9526 for a free consultation.  There is no obligation for you buy anything.

  A real life story.....