FEGLI – The Good, the Bad, and the Just Plain Ugly
by June Kirby
As an employee of the Federal Government, it is likely that you have access to life insurance coverage through the Federal Employees‘ Group Life Insurance, or FEGLI, program. This plan, established over 60 years ago, is estimated to protect in excess of 4 million Federal employees and retirees, along with a large number of their eligible family members.
Most Federal employees are eligible for coverage through FEGLI. Through the program, the employee’s portion of the premium is deducted directly from his or her paycheck by the payroll office.
One of the biggest advantages to FEGLI coverage is that you have several options in determining how much coverage you can obtain. First, there is the option to just receive “Basic” insurance that is equal to your salary, rounded up to the next even thousand, plus another $2,000.
On top of that, however, there are three additional options where an employee can add more coverage to the Basic amount. These options include a flat additional $10,000, or different multiples based on either salary amount or family members (i.e., spouse and children).
Another nice feature about the FEGLI insurance coverage is the fact that once you are eligible for this program, there is no medical examination required in order to be accepted for the life insurance policy. Therefore, if you (or your eligible family members) have an adverse medical condition, you will still be able to obtain the life insurance policy. This can be a great way for someone who is not able to qualify for individual life insurance coverage to obtain the life insurance protection that they need.
The Bad….and the Ugly
Although there are many advantages to participating in the FEGLI program, there are also a few factors to be mindful of as well. First, there are two primary types of life insurance that are offered in the market place – term and permanent. Term life provides only death benefit protection, whereas permanent offers both a death benefit, as well as a cash value component. The insurance that is offered through FEGLI is term. Therefore, the only benefit here is death benefit coverage, with no cash value or savings plan combined with in.
Also, even though term life insurance is oftentimes more affordable in the early years, these policies will become much more costly as an insured increases in age. This is usually the case with FEGLI participants. Here, the price increases can be quite high for those who are in their 50s and 60s – so it is important to be aware that you may see your premium double, or even triple, as time goes on.
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About 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.