The insurable interest survivor annuity
For a partner, child, sibling, or parent. The cost rises with the age gap.
On a $40,000 annuity naming someone 30+ years younger: you give up $16,000 a year, and they would receive $13,200 a year. Price a term life policy before you elect.
Jump to a section
1. What it is, and who it is for
The regular survivor annuity is for a spouse, or a former spouse under a court order. The insurable interest annuity covers someone else: a person who would reasonably expect to benefit financially from your continued life.
In practice it is used for an unmarried partner, an adult child who depends on you, a sibling, or a parent. It is also the route for providing something to a current spouse when a court order for a former spouse has already absorbed the regular survivor benefit — covered in former-spouse court orders.
It works differently from a spousal election in one way that matters a great deal: the survivor gets 55% of your reduced annuity, not 50% of your unreduced one. The reduction comes off first, then the survivor's share is calculated from what is left.
2. The cost, by age gap
Your annuity is reduced by a percentage set by how much younger the named person is than you:
| The person you name is… | Your annuity is reduced by |
|---|---|
| Older, the same age, or under 5 years younger | 10% |
| 5–9 years younger | 15% |
| 10–14 years younger | 20% |
| 15–19 years younger | 25% |
| 20–24 years younger | 30% |
| 25–29 years younger | 35% |
| 30 or more years younger | 40% |
Here is what that means on a $40,000 annuity:
| Named person | Reduction | Your annuity | Survivor receives |
|---|---|---|---|
| Sibling, 3 years younger | 10% | $36,000 | $19,800 |
| Partner, 12 years younger | 20% | $32,000 | $17,600 |
| Child, 32 years younger | 40% | $24,000 | $13,200 |
The last row is the one to sit with. You give up $16,000 a year for the rest of your life so that your child might receive $13,200 a year after you die. The earlier you die, the better that trade looks; the longer you live, the worse.
3. Who qualifies
An insurable interest is presumed — you don't have to prove it — for:
- A spouse or former spouse
- A blood or adoptive relative closer than a first cousin: a child, sibling, or parent
- A person with whom you live in a relationship recognized as a common-law marriage where you live
For anyone else, such as an unmarried partner in a state that doesn't recognize common-law marriage, you submit affidavits with your retirement application from people who know the situation, explaining why the person would reasonably expect to benefit financially from your continued life.
You can name only one person. If you have three children, you choose one; the benefit cannot be split, and OPM will not accept a contingent beneficiary.
4. The requirements
- You must be in good health. Attach a current medical report, signed and dated by a licensed physician, to your retirement application. You pay for the exam.
- You cannot be retiring on disability. Disability annuitants can't make this election.
- It is made at retirement. The main window is your retirement application.
- It ends if the person you named dies, or if you marry them and elect a regular spousal annuity within two years of the marriage, which cancels the insurable interest election.
A surviving spouse can keep FEHB through a survivor annuity. A non-spouse beneficiary — a sibling, an adult child over 26, a partner who isn't a spouse — generally is not an eligible family member, so the annuity does not bring FEHB with it. If health coverage is the goal, this election usually won't deliver it. See survivor FEHB.
5. When it makes sense
It tends to make sense when the person is close to your own age, so the reduction is small; when they genuinely depend on your income; and when you have health concerns that make private life insurance expensive or unobtainable — though you still need to pass the medical requirement here.
It rarely makes sense for a much younger beneficiary. A 30-plus-year gap costs 40% of your annuity for life. A term or permanent life insurance policy often delivers a comparable benefit for far less, and it can name several beneficiaries and contingents. Get a quote before you commit.
The broader set of survivor choices — full, partial, none, and the spousal rules — is in survivor benefit elections, and declining a spousal annuity in declining the survivor annuity.
6. Frequently asked questions
What is an insurable interest survivor annuity?
A survivor annuity you can elect at retirement for someone who would reasonably expect to benefit financially from your continued life, other than through a regular spousal election. It is most often used for an unmarried partner, a child, a sibling, or a parent. Your annuity is permanently reduced to pay for it, and the person you name receives 55 percent of your reduced annuity after your death.
How much does it cost?
Your annuity is reduced by 10 to 40 percent, depending on how much younger the person you name is than you. Someone older, the same age, or less than five years younger costs 10 percent; each additional five years adds five percentage points; someone 30 or more years younger costs 40 percent. The survivor then receives 55 percent of the already-reduced annuity.
Who can I name?
An insurable interest is presumed for a spouse, a former spouse, a blood or adoptive relative closer than a first cousin such as a child, sibling, or parent, or a person with whom you live in a relationship recognized as a common-law marriage where you live. For anyone else, you must submit affidavits from people who know the circumstances explaining why that person would benefit financially from your continued life. You can name only one person.
Do I need a medical exam?
Yes. You must be in good health and provide a current medical report, signed and dated by a licensed physician, with your retirement application, and you pay for the examination yourself. Employees retiring on disability cannot make this election at all.
Can the election be changed later?
It ends automatically if the person you named dies. If you later marry the person you named, you may elect a regular spousal survivor annuity within two years of the marriage, which cancels the insurable interest election. Otherwise it is generally fixed, so the decision at retirement is the one that counts.