Rick Spruill Talks About Optimally Leveraging your FEGLI Coverage Options
RICK SPRUILL – Use the following three factors to help determine whether FEGLI is a sustainable coverage option for you. The first factor addresses your ability to satisfy underwritersrequirementsforindividualFEGLI protection. Doing so entails meeting criteria established by your lifestyle, social habits, age, and health. A second factor that determines whether you are eligible for FEGLI protection is the duration of protection. Keep it in mind shortly, a large percentage of federal employees in their 50s and 60s will have their FEGLI coverage revoked. Finally, your life protection needs also determine your qualification status.
Presently, the Federal Employee GroupLife Insurance provides the most extensive coverage policies in the world. Accordingly, coverage plan offers you plans that require no medical underwriting with competitively priced death benefits. Besides that, death benefits begin immediately upon enrollment. However, the flipside is that FEGLI premiums increase over time for all insurees. These changes are attributed to policy design innovations within this industry over the past couple of years.
But What If I Am Terminally Ill with Cancer, Suffer a Stroke or Heart Attack?
If this happens to you, expect to pay higher premiums. Subsequently, your ability to pay bills will adversely be affected. However, if you are eligible for living benefits, access to accelerated tax-free payments of your death benefits is available. But to do so, you need to make an application based on your needs.
On the other hand, the optional FEGLI offers nothing. So if you don’t have access to enough emergency funds or sick leave, you can apply for a hardship withdrawal. Even so, this can potentially wipe out of your reserves. Besides that, taxes will eat a significant chunk of your retirement assets as well as incur a 10% early withdrawal penalty.
With medical innovations increasing the average lifespans of most Americans, most federal employees are concerned about living longer than expected.
Although that is true, all types of insurance policies are geared towards ensuring that you maintain a comfortablelifestyle for your family. But families need to identify the kindof protection they require on an individual basis. Doing so can help these families prioritize their insurance needs and budgets.
Nonetheless, if insurance were free, then it would be possible to protect families against any conceivable harm. For this reason, most of us would opt to have full protection against multiple disasters. If we can potentially foretell the future, individuals would select optimal protection. In retrospect, it is not possible to do that, which means that we often cannot foretell what kind of protection is necessary. Consequently, selecting the best protection mandates that we identify the best coverage options at pocket-friendly prices.
Accordingly, this is a risky consideration when shopping for a comprehensive coverage option. For instance, polls of federal employees reveal that not many of them have significant savings to afford a cancer policy. Although one might have cancer coverage and then dies from a heart attack, than any cancer and LTC coverage they have is a waste of resources. Nonetheless, having a policy with multiple covers is the ideal situation. According to Rick Spruill, a perfect policy should cover all possible outcomes minus the additional costs, risks, or complications of acquiring use or lose it coverage.
So, who requires FEGLI coverage?
Initially, FEGLI coverage is suitable for federal employees under 45 years of age, why is that so? It is because at this age there is no Basic Extra Benefit as well as diminishing 5-year cost increases. This means that you have access to affordable alternatives and increased flexibility of LivingBenefits. Also, FEGLI is ideal for those with preexisting health conditions or risky lifestyles(read sea divers or tobacco smokers) that cannot be converged under a conventional insurance policy.
Although FEGLI coverage for all federal employees, its premiums are equal for both chain-smoking fast food aficionados and physically active vegans. What’s more, premiums are expected to rise by 2066% for both groups between the ages of 35 and 65. Here is a calculator to help you compute FEGLI premiums if you are 65 and above.
So, What Will You Do?
You need to ponder over these questions before settling for FEGLI as your desired coverage option. Alternatively, you could shop around for an affordable option that has Living Benefits.However, to do so evaluate the following questions:
- Ask yourself why you need coverage: is it to protect my family’s present lifestyle after my demise or is it to defend its present and future lifestyle?
- How eligible am I for underwriting?
- Will waiting before getting FEGLI coverage affect your eligibility for individual coverage?
- How long do I need to have FEGLI coverage to ensure that my family is fully covered after I am gone?
- How much retirement savings do I have for offsettingLivingBenefits?
Caveat! Do not wait too long before evaluating FEGLI policies as premiums are bound to rise in the future. Thus, you need to collect and evaluate available options to help you make the most suitable decision for your family and you. Once you decide to stay, leave, or drop coverage, you need to consult with a federally-certified financial advisor in making your decision.
So, What Will You Do?
Rick Spruill is a Financial, Retirement, Military and Civil Service Retirement TSP Fegli and VGLI Life insurance Conversion Expert, Wealth Transfer, Nursing home, Estate, Consulting and Planning Experts and a Business Tax reduction expert…
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