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Even if you have a High Deductible Health Plan, or traditional medical insurance, you may not be covered for all of the expenses related to the treatment and recovery from a major illness. Combined with Accident or Disability insurance, Critical Illness insurance can help ensure you’ll be better prepared to cover out-of-pocket expenses in the event of a serious illness. 

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How does my leave and disability impact finances?
There are at least five reasons you are financially exposed:
  • Because leave and disability retirement are separate programs with different eligibility requirements and don’t coordinate, you could find yourself in extended periods of LWOP with no income coming in.
  • Leave donations are just that – donations which are not guaranteed for a specific period of time and are not tied to your monthly bills.
  • Now that you can convert your unused leave to increase your retirement income, like most federal employees, you should become more reluctant to make donations.
  • Disability retirement provides a base pension benefit that offers a two year step rated down income stream that levels off at 40% of your high-3 average salary. This pension benefit is not only taxable, it doesn’t come with COLA. As an actively working employee you may find it difficult to live on this benefit amount.

The combination of LWOP with the reduced income received from disability retirement may force you to withdrawal funds from your TSP, or other savings and investments before you’re ready. The premature liquidation of your TSP or other savings and investments will have a negative impact on your future income security.