Use FEGLI Option B to Give Yourself a Raise
This may come across as some bad news, but if you are participating in the Federal Employee Group Life Insurance (FEGLI) Option B plan then you might really be paying too much for your life insurance protection. This is especially true if you are currently in good health.
Not to worry though! You could potentially save a lot of money with a simple review of your FEGLI Option B benefit and by discussing it with a reliable financial professional who is well-versed in FEGLI.
You may be aware that the Option B coverage is determined based on your chosen multiple of your income (1x by 5x of your yearly salary). Your premium is dependent on total coverage multiplied by an insurance charge rate at your current age.
This is the part where it gets confusing – that premium goes up every five years, starting the month following your 35th birthday, all the way up to up to age 80. Your premium inside your check stub slowly increases while your take-home pay just reduces equally. This happens without warning or notification. Surprisingly, it can be as high as a 120% immediate increase, which is the equivalent of paying $100 a month and then $220 the following month for the same life insurance security.
To be clear, we are not discussing FEGLI Options A or C. These actually seem like excellent benefits for many federal employees. Additionally, FEGLI Option B is an outstanding opportunity for the employees either under 35 years of age or those who are facing health issues and are not eligible or can’t afford private life insurance. In case you fall within any of the categories above, it’s recommend that you max out the FEGLI Option B value to the point at which you can afford it.
If you are healthy enough and/or above 36 years of age and enjoy the life insurance protection, then you definitely have some options. Financial planners or life insurance agents are helpful when it comes to addressing your personalized options. This is especially true if they specialize in FEGLI.
Evaluating your FEGLI Option B Life Insurance rates right away is the best way to give yourself a raise. If it’s possible to lock in lower rates then swapping coverage should be a no-brainer. However, only cancel your FEGLI Option B after a formal life insurance underwriting from a reliable life insurance company has been received.
Reach out to your local financial professional for more information.