WHAT YOU NEED TO KNOW ABOUT
Federal Employee
Group Life Insurance
THE MAIN ADVANTAGE of owning a life insurance policy is that if you die , your beneficiaries receive a payout that replaces the income you provided while you were alive . The disadvantage is that you have to pay monthly or annual premiums for this benefit . The pros of having life insurance outweigh the cons for most people with financial responsibilities ; however , you must carefully consider your options .
FEDERAL EMPLOYEE GROUP LIFE INSURANCE ( FEGLI ) IS OFFERED TO ALL INCOMING FEDERAL EMPLOYEES
Federal Employee Group Life Insurance ( FEGLI ) is offered to all incoming federal employees and provides extremely competitive pricing for traditional death benefit protection to young employees . In addition , no underwriting is required .
There are two types of FEGLI : Basic and Optional .
BASIC This option offers your salary rounded up to the next even $ 1,000 , plus $ 2,000 . It includes “ Accidental Death and Dismemberment ” coverage at no additional cost plus “ Extra Benefit ” coverage for enrollees under age 45 . The Extra Benefit doubles the amount payable for Basic if you are age 35 or younger when you die . This extra amount decreases each year by 10 % until there is no “ extra ” coverage payable if you die at age 45 or older .
OPTIONAL There are three types of Optional insurance :
• Option A – Standard : $ 10,000 of life insurance
• Option B - Additional : you choose from one to five times your salary
• Option C - Family : coverage on your spouse and eligible dependent children
If you are employed in a “ FEGLI-eligible ” position , you are automatically covered the first day you are in a pay-and-duty status with your employing agency for basic coverage .
You may also purchase additional coverage or elect to cover your spouse and eligible dependent children under this program . If you elect to waive basic coverage , you may not elect optional coverage .
What you need to know is that starting around age 45 , the pricing of your coverage starts to increase and continues to do so exponentially over the latter years of your career and even into retirement .
For those unable to qualify elsewhere , this may remain the most affordable approach to providing a legacy , but for the majority of federal employees , there are more innovative and more affordable alternatives that can simultaneously protect you , your retirement , and your family !
Something to consider : in retirement , you will most likely be on a fixed income and have to budget for expenses , so paying for Option B ’ s increasing premiums may be too expensive
Upon retirement , your Option A coverage will reduce to $ 2,500 over time , and you will have two basic options for coverage :
• keep the full basic amount , which will have additional premiums or 50 % reduction , or
• you can reduce to 25 % with no additional premiums .
You might also want to consider getting private permanent or a term policy .
Depending on how much coverage you need and your age when you apply , you may be paying as little as $ 20 per month in premiums for a term life insurance policy . You can lower your coverage amount and term length to get even lower premiums that fit into your budget .
With permanent coverage , there ’ s additional benefits that include cash value , return of premium , or accelerated living benefits .
Term life insurance expires by the time you have fewer expenses . If you buy life insurance coverage early enough , you could save hundreds of dollars each year compared to buying coverage later in life .
CJ Huffman , during his decade of working in the retirement market CJ has given hundreds of clients peace of mind by educating and helping them achieve financial security in their retirement plan . He has completed his FedEd Financial Advisor Training Program and is an authorized federal benefits trainer with Freedom Federal Educators . CJ has also earned the FRC ( Federal Retirement Consultant ) designation from Federation of Federal Employee Benefit Advocates ( FFEBA ).
FREEDOMFEDED . COM LIFE INSURANCE
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