FERS Survivor Annuity vs. Life Insurance

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Key Differences

Payment Structure:

  • Survivor Annuity: Provides monthly, ongoing payments to the beneficiary.
  • Life Insurance: Offers a lump-sum payment to beneficiaries upon the policyholder’s death.


  • Survivor Annuity: Cost is based on a federal employee’s retirement benefit percentage.
  • Life Insurance: Premiums vary based on policy type, coverage amount, age, health, and lifestyle of the insured.

Benefit Adjustment:

  • Survivor Annuity: Benefits are subject to cost-of-living adjustments (COLA).
  • Life Insurance: The death benefit amount is typically fixed and does not adjust for inflation.

Tax Implications:

  • Survivor Annuity: Payments are generally subject to income tax.
  • Life Insurance: Death benefits are usually tax-free for the beneficiaries.

Considerations for Choosing

  • Financial Needs of Beneficiaries: Annuities provide steady income, which is beneficial for long-term financial support. Life insurance is more suitable for covering immediate expenses like debts or funeral costs.
  • Beneficiary’s Age and Health: An annuity can be better for an older or health-compromised beneficiary who may not qualify for affordable life insurance.
  • Duration of Benefits: Annuities offer lifelong financial support, while life insurance provides a one-time payment.
  • Flexibility in Beneficiaries: Life insurance policies allow more flexibility in changing beneficiaries than survivor annuities.
Fers Survivor Annuity Vs. Life Insurance Breakdown


  • Scenario 1: A retiree with a young spouse might prefer a survivor annuity to ensure continuous financial support.
  • Scenario 2: An individual with significant debts might opt for life insurance to cover all debts upon passing.

Survivor Annuity vs. Life Insurance

FeatureFERS Survivor AnnuityLife Insurance
Payment TypeRegular Monthly PaymentsOne-Time Lump Sum
AdjustmentsCOLA AdjustmentsFixed Benefit
Tax on BenefitsTaxableUsually Tax-Free
Cost DeterminationPercentage of Retirement BenefitBased on Multiple Factors
Beneficiary FlexibilityLimitedHigh


Deciding between a FERS Survivor Annuity and life insurance involves evaluating beneficiaries‘ unique needs, financial situations, and the desired type of support. A survivor annuity provides consistent, long-term financial security with COLA adjustments, whereas life insurance offers a significant, tax-free lump sum, ideal for immediate financial needs and flexibility. The right choice depends on individual circumstances and goals.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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