FEGLI – Option B
Let’s talk about Option B under the Federal Employees Group Life Insurance (FEGLI). Option B represents additional insurance of which you have the right to carry into retirement. The value of your FEGLI Option B insurance depends on your coverage election.
You have the option of choosing one, two, three, four or five times your annual basic pay rounded to the next $1,000. As with Option A, you are responsible for paying the full cost of the premium. The premiums are age weighted as with Option A.
With Option B, you have two opportunities to make an election — first, at retirement and shortly before your 65th birthday. If you have already reached age 65, at retirement you have the opportunity to elect when you retire and shortly after retirement.
At first election you can choose two levels of coverage: Full Reduction or No Reduction for all multiples. If you choose Full Reduction, at age 65 Option B will reduce at the rate of 2% a month until it reaches zero.
If you choose No Reduction, then the full amount of your coverage will continue until your death unless you change to Full Reduction. At the second election you can choose Full Reduction or No Reduction for any or all multiples of coverage.
If you choose not to stop the future reduction of your coverage when you reach age 65, premiums will cease and the value of your insurance will drop by 2% per month until it reaches zero.
However, if you choose to elect unreduced Option B, its value will not be reduced unless you later cancel the election or change the amount of coverage. In that respect, premiums will continue beyond your 65th birthday. The government will also contact you before you reach age 65 to request your election. You have the option to reduce part or all of your coverage.
Understanding all of the provisions of your life insurance is important and can be a challenge. You don’t have to travel this path alone; there are life insurance specialists that are available for you. These would be licensed and trained financial professionals who are experts in this field. In addition to the work that your HR department can do for you, these experts can probably help you find cheaper options, especially as you age.
Take the initiative and work with your human resources office to have a representative visit your office for a brown-bag round table where you can have the opportunity to get answers to your questions. Hint: Develop your questions before the round table so that you are sure not to miss anything.
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
Click HERE for information on Retirement Planning
P. S. Always Remember to Share What You Know.