Last Updated on February 22, 2019 by lifepolicyshopper
Federal Employees Group Life Insurance plan is also known as FEGLI; is a group life insurance plan that offers federal employees a life insurance program at good prices for basic coverage. This Plan is set up when you start your Federal career. Many employees hear a little bit about this from their benefits specialist and go back on their own and make their selections. Basic FEGLI is a reasonably priced plan with good coverage. However, for the optional coverage use the FEGLI calculator to see how the premiums increase every five years starting at age 35 and the monthly payment becomes prohibitive starting around age 50. You do have FEGLI options that can save you money over time.
Carry FEGLI Basic Coverage Into Retirement
The clients we work with get basic FEGLI coverage and that is what they carry into retirement. Basic FEGLI coverage is 1 times your salary rounded up to the nearest $1,000 and $2,000 added on top of that. This basic coverage is a pretty good deal. Then at retirement, we teach our clients to use the FEGLI calculator to discover their FEGLI options and see how they can carry their basic coverage into retirement and select the 75% reduction. Then at retirement, the plan will begin reducing at a percentage a year down to 25% of the value that it was at retirement. Then at age 65 the retiree will have this 25% amount left as a death benefit with no further premiums due after the age of 65.
Learn about FEGLI Options and Buy Your Own Private Life Insurance Policies
The clients we work with realize the value of owning a private life insurance plan rather than participating in FEGLI optional coverage since it rises in cost and it expires upon retirement. The FEGLI optional coverage is the coverage that insures you up to 5 times your salary (option B). It’s our position here at lifepolicyshopper.com; that you can get much more death benefits for your money if you buy your own level term life insurance policy that doesn’t rise up in price every five years.
The FEGLI optional coverage also refers to insurance for your family members (Option A and C). We show clients they can get much better coverage for their dependents using their own private life insurance policy that will last beyond their federal job. This is yet another money-saving FEGLI option.
We advise all federal employees that are in average to good health to seek options in the private market and compare with their FEGLI policy. The cost of a FEGLI option B policy is outrageously expensive compared to private market options. The FEGLI Option B plan is a term life insurance policy that is administered at group rates and the price goes up every 5 years. Under a group program, the enrollment is guaranteed as long as it is done during the open season, and the healthy employees pay more in premiums to offset the risk of insuring unhealthy employees.
The FEGLI Option B policy is a term life policy so it does not build any cash value and the policy does not guarantee your loved ones will receive a death benefit. The federal employee is hedging their bets to see if they pass away during the allotted time period and if they do then their family will receive the death benefit.
A permanent life insurance option on the private market not only will guarantee the beneficiary will receive their death benefit but it will also build cash value for the federal employee if they need to borrow against it in an emergency. This program also ensures that estate taxes will be paid and final wishes will be taken care of.
The cost for a federal employee that is a 45-year-old male for $250,000 of FEGLI Option B coverage that covers him to age 75 will cost a total of $88,400. If that employee does not die before age 75 he just paid $88,400 for nothing. If that same man purchased a permanent life insurance policy at age 45 for $250,000 he would still have only paid $59,000 in premium by age 75 but would also have a guaranteed cash value built up of $16,000 and more importantly his death benefit is in place for the rest of his life.
Buy a Low Cost Privately Owned Term Life Insurance Policy
To start with review and understand your life insurance requirements. Figure out if you really need life insurance at this point in time or not. If you don’t have any dependents, then don’t go in for a life insurance policy.
Get an instant online quote here on LifePolicyShopper.com. Make sure you consult an independent insurance agent/broker to get an unbiased understanding of the market. We are in a better position to synchronize your unique insurance requirements with the most affordable options available. Even after procuring the policy we will help in getting the most out of the plan to ensure that your FEGLI options will meet your individual needs.
Go the Online Way! Some of the cheapest life insurance quotes come from online insurance companies. This is because they have lower overheads as compared to traditional service providers. Also, the fact that it is easier to compare plans and rates over the internet puts additional pressure on these online vendors to downgrade their quotes.
Shop, Compare and Bargain Hard! Explore the market thoroughly. It would be one effort you will not regret. Gather the quotes for different coverage tiers in line with your requirements and then compare them judiciously. Ensure that you compare apples to apples! Keep in mind that a quote that comes with the lowest initial payment might not be the cheapest one. When you talk about life insurance, think long term. A policy with a higher premium might be a value for money plan. Once you have short-listed your best picks, it is time to sit down with the respective insurance companies and negotiate the best price. Remember, information is power – if you know the market, you can bargain hard and get the lowest possible quote.
The BELOW image shows how your EPP should look after you drop the FEGLI options coverage and buy level term in order to SAVE THOUSANDS.
Use our calculation spreadsheet to show how much you can save over the course of your career. Check it out at Low Cost Term Insurance Alternative to FEGLI Option B for Career Federal Employees