Retirement & Life Insurance
By June Kirby
June Kirby has well over a decade of experience serving as a Federal Employee Retirement Trainer and expert. June Kirby has extensive knowledge in both TSP and other Federal Retirement benefits. Ms. Kirby tirelessly travels the Country making herself available to Federal & Postal Employees, Federal Agencies, Unions and Organizations and partners with PSREducators.com (PSRE), and as one of the top providers of PSRE’s services, June Kirby continues to generously make herself available to hundreds of deserving Federal and Postal Employees each and every year by offering consultation on federal retirement benefits and TSP maximization strategies.
Upon retirement, you will need to settle on a few choices about coverage for life and medical insurance, especially if you are enlisted in either of these programs. Today we will be focusing on the Federal Employees’ Group Life Insurance (FEGLI) Program, and the rules governing it.
During your initial hire, you were consequently secured by Basic insurance coverage, unless you opted to waive it. The coverage amount is equal to your base compensation, which is then rounded up to the next $1,000, plus an additional $2,000. Your amount of coverage increases with your salary. You are responsible for paying 1/3 of the premium, and the government takes care of the other 2/3.
At the time of retirement, you’ll be given three options:
- 75% decrease in your Basic insurance – You will keep on paying the same premiums for that protection that you did as an employee, until age 65. Your Basic insurance’s value will then decline until it reaches 25 percent of its face value, at the rate of 1 percent per month.
- 50 percent reduction – Starting at 65, your Basic insurance will be reduced by 1% per month until 50% of its face value is reached.
- No reduction – You will pay an even higher premium
Option A – Standard Insurance
In the event that you are secured by Basic insurance, you can purchase an extra $10,000 of coverage at your own cost. Premium rates increase over time, but they are modest for young employees. Premium deductions will cease at the end of the month that your 65th birthday is reached. By then, your Option A protection will consequently decrease by 2 percent every month, until 25$ of its face value is reached.
Choice B – Additional
Choice B enables you to select a sum equivalent to one, two, three, four, or five times your yearly salary after it has been rounded up to the nearest $1,000. At retirement, you’ll be offered the chance to keep the coverage you had as an employee, which means you’ll keep on paying the full cost of coverage, which will keep on rising as you age. In order to reduce the cost, you can reduce the number of multiples or allow the dollar value of the coverage to decline at a rate of 2% per month for 50 months until it reaches zero, starting at the age of 65.
Alternative C – Family
Option C lets you obtain coverage for your eligible dependents and spouse at your own cost. Similarly, as with Option B, you can choose up to five multiples of coverage, with each equalling $5,000 for your spouse and $2,500 for each of eligible dependents. The premium cost per multiple is a component of your age. That coverage is free after age 65 when it will consequently decrease at a rate of 2 percent for each month for 50 months until the point when it achieves zero.
If you have any questions regarding your options, please seek out a financial professional for advice.
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