5 U.S.C. § 8706 — Termination of insurance; assignment of ownership

(a) A policy under this chapter must provide that an employee's insurance stops when they separate from service, or 12 months after their pay stops, whichever is earlier — subject to a temporary extension of life insurance and the option to convert to an individual policy, under conditions the Office of Personnel Management approves. Certain justices and judges described in section 8701(a)(5)(ii) and (iii) are treated as continuing in active employment for this chapter. (b) An employee who retires on an immediate annuity, and who was insured throughout either the 5 years right before retiring or their full eligible-service period if under 5 years, may keep life insurance (without accidental death and dismemberment coverage) under conditions the Office sets. The same applies to an employee who becomes entitled to compensation under subchapter I of chapter 81 for a work-related disease or injury, and who was insured throughout the 5 years before becoming entitled, or their full eligible-service period if shorter — their insurance may continue, without accidental death and dismemberment coverage, while they receive compensation and are held by the Secretary of Labor (or the Secretary's delegate) to be unable to return to duty. The amount of insurance continued this way stays fixed or is reduced at the end of each month once the employee turns 65 and is retired or receiving compensation, based on the employee's written election made when eligibility to continue insurance first arose: (A) the employee can elect to have the required deductions withheld from annuity or compensation, with life insurance reduced 2 percent each month until it reaches 25 percent of the amount before the first reduction; or (B) in addition to what (A) requires, the employee can elect continuous withholdings the Office determines, with coverage continuing unreduced or reduced by no more than 1 percent a month until no less than 50 percent of the pre-reduction amount remains. If an employee elected option (B) but later cancels that election, coverage continues as if the employee had originally elected option (A). (c) Despite subsections (a) and (b), an employee who takes approved leave without pay to serve full-time as an officer or employee of an organization made up mainly of employees (as section 8701(a) defines) may, within 60 days of starting that leave, elect to continue insurance and arrange to pay both the employee's and agency's contributions into the Employees' Life Insurance Fund, through the employing agency, starting from the beginning of the leave without pay. The employing agency must forward the premium payments to the Fund. If the employee doesn't so elect, insurance continues during nonpay status and stops as subsection (a) provides. (d) (1) An employee on approved leave without pay under the circumstances in paragraph (2) may elect to continue life insurance for an additional 12 months beyond subsection (a)'s normal 12-month coverage, and arrange to pay both employee and agency contributions into the Fund, through the employing agency, from the start of that additional 12 months. The employing agency forwards the payments. If the employee doesn't so elect, insurance continues during nonpay status and stops as subsection (a) provides. An employee who makes this election may cancel it anytime, and insurance then stops as subsection (a) provides, or upon receipt of the cancellation notice, whichever is later. (2) This subsection applies to an employee who (A) is a reserve-component member called or ordered to active duty for more than 30 days, and (B) takes approved leave without pay to perform that active duty. (e) If an employee's insurance stopped because of separation or unpaid suspension that's later officially found to have been erroneous, the employee is deemed to have been insured during that period of erroneous separation or suspension. The deductions section 8707 otherwise requires won't be withheld from any backpay for that period, unless the employee died or was accidentally dismembered during it. (f) (1) Under Office regulations, every policy under this chapter must let an insured employee or former employee make an irrevocable assignment of their ownership rights in the policy. (2) A court decree of divorce, annulment, or legal separation, or a related court-approved property settlement, may direct an insured employee or former employee to make an irrevocable assignment of their ownership rights (if there's no earlier assignment) to the person the court specifies. (g) If a former employee's insurance stopped because their disability annuity under section 8337 ended, and that annuity is later restored under that section's second or third sentence, the former employee may, under Office regulations, elect to resume the insurance coverage that had stopped. (h) Insurance under a policy purchased under section 8709 won't be invalidated based on a later finding that the employee was erroneously insured, or erroneously continued insurance upon retirement or entitlement to compensation under subchapter I of chapter 81, if that finding comes after the erroneous insurance and its withholdings have been in force for 2 years during the employee's lifetime.