Federal Employees Group Life Insurance
The Federal Employees Group Life Insurance or FEGLI is a group life insurance program aimed at providing benefits of insurance to the federal employees.
FEGLI – Did You Know?
The Office of Personnel Management (OPM) is the only entity that has a record of your FEGLI file. They can tell you how much coverage you have and who your beneficiaries are. With proper identification of yourself for safety and security, OPM will gladly provide that information to you if you need to verify or confirm your coverage… But there are limitions.
Conversely, OPM has nothing to do with a claim being filed or answered in the event of the policy holder’s death. So don’t get upset if you call OPM concerning a claim and they due to privacy issues cannot respond to your questions. Not to mention OPM cannot make recommendations to you about the amount of coverage or whether or not FEGLI is the best solution for you. Remember – FEGLI is not insurance provided by the Federal Governement – but a contractor who still has a profit motive.
FEGLI Coverage
The administrative arm of the OFEGLI (Office of Federal Employees’ Group Life Insurance) represented by MetLife will handle your claims issues and concerns. MetLife pays death claims for Federal Employees covered under FEGLI.
If the claim is less than $5,000 it is paid to the beneficiary via check. If the claim is $5,000 or more, it is paid in two ways: By check or TCA (Total Control Account). Under TCA an interest bearing account is set-up in the name of the beneficiary with MetLife. If no decision is made as to how the claim payment should be distributed, then MetLife sets up a Total Control Account.
If a policy holder passes away family members may contact OPM via phone or use the website to inform OPM of the death.
Discuss these provisions with your family members so that they will be informed and take the proper steps necessary to assist in taking care of the business of your life.
P.S. Always Remember to Share What You Know.
RELATED TOPICS – More Federal and Postal Insurance Information
Federal Employees Health Benefits (FEHB)
Federal Flexible Spending Account (FSAFEDS)
Federal Long Term Care Insurance Program (FLTCIP)
Federal Employees and Medicare
Federal Employee Dental and Vision Insurance Program (FEDVIP)
FEGLI – The Extra Benefit
FEGLI – The Extra Benefit
We have talked a lot about FEGLI and yet there are many aspects of the Federal Employees Group Life Insurance we still need to touch upon. If we don’t hit upon every single aspect of FEGLI and FEGLI Rates and there are still things you need and want to know, just drop a comment so that we can address your concerns. Our goal is to hopefully answer your questions and discuss topics in a way that is clear and refreshing.
We certainly try to use an approach that is more like talking to your friend in the living room or for me; the hang-out is the kitchen. Wherever you decide to have the conversation, the important thing is to have it. End of life discussions can be difficult for families and friends. I like to refer to life, whether it is the beginning or the end of the journey as –Getting Prepared for the ME.
Who knows better about what you like and how you like it than you. Therefore, it is simply better to have the opportunity to make your own preparations just the way you like. We didn’t talk about the extra benefit provision of FEGLI in our past posts. I thought it needed its own space:
FEGLI offers an extra benefit to employees under age 45 at no extra charge. The benefit doubles the amount of life insurance payable when you are age 35 or younger. However, on your 36th birthday, the extra benefit decreases at the rate of 10% annually terminating the benefit at age 45. The extra benefit is one of those extra good-to-know items you don’t want to pass-up without evaluating it benefits to you.
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In the following posts we are going to discuss a few other important aspects of FEGLI.
P. S. Always Remember to Share What You Know.
FEGLI – Assignment
FEGLI Assignment
FEGLI Assignment of Benefits – Employees can, as of a law passed in 1994, assign their FEGLI Basic, FEGLI Standard Optional and FEGLI Additional Optional life insurance to an individual, individuals, a corporation or an irrevocable trust.
Although there are countless reasons why a FEGLI policy holder might consider an assignment of benefits, the most common cause is generally to comply with a court order. Premium deductions continue from your salary or annuity.
Once the assignment has been made, you cannot cancel your life insurance nor make any future beneficiary changes. Before we leave our FEGLI discussion, let’s discuss briefly the Living Benefit.
Although the Living Benefit is still a relatively new term for many, it has become increasingly popular as more and more individuals and families struggle with life threatening illnesses leaving them strapped for money.
The FEGLI Living Benefit allows the policy holder to cash in FEGLI Basic coverage if he or she is expected to pass away from an illness in 9 months or less. The Living Benefit is paid to the policy holder instead of survivors or beneficiaries. This option can only be exercised once. When the election is made it cannot be cancelled or retracted.
However, if the policy holder does not expire during the time expected and recovers, he or she is not obligated to pay the money back. When the full living benefit is enacted, the premium deductions stop and the policy is also terminated.
Life insurance is an important part of the financial planning process and FEGLI is a great product until you reach a certain age (speak to a financial professional to help determine when that is). Life insurance is highly personal and individual. Key decisions about your life can only be made by you and your loved ones. No matter what information you share with a professional, the biggest part of the decision-making is emotional and only you get to own it. Make sure you are working with a knowledgeable financial professional to ensure that you have the right answers to these very difficult questions.
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P. S. Always Remember to Share What You Know.
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FEGLI – Conversion
FEGLI Conversion
The term conversion is when a policy is converted (changed) into another type of policy, i.e. from a group life insurance policy to an individual policy without undergoing a physical examination to qualify. If you are a Federal or Postal Employee you will need to understand how the term ‘Conversion’ relates to FEGLI.
Your coverage as an employee ceases when you resign, complete 12 months in a non-pay status or when you retire. Regarding any of the above conditions, if you need life insurance, you can consider converting to a non-group individual policy and you will not have to be given a physical examination to qualify. With FEGLI (watch the video) this is challenging due to the typicaly costs associated with the new ‘converted’ policies available. If you are healthy, you would typically be better off Comparing your FEGLI on the internet or with a qualified FEGLI expert against the open market to determine the best option available for you and your family.
You may also want to convert to avoid the Mandatory Reduction in FEGLI Option A that commences upon reaching age 65 and you are retired. You can also choose to continue your Basic insurance into retirement and convert some or all of your optional insurance.
It should be noted that if you assign your insurance, you forfeit the right to convert your coverage leaving that privilege open only to the assignee. We will talk more in upcoming posts about Assigning your insurance.
Having a good understanding of FEGLI will assist you and your family in planning for and taking care of the final business of your life.
P. S. Always Remember to Share What You Know.
FEDERAL RETIREMENT INFORMATION
For more information federal and postal Retirement Planning
Additional FEGLI information HERE
For access to your TSP.gov login
Postal employees can access their LiteBlue.usps.gov account from here
More About FEGLI – FEGLI Option C
FEGLI Option C
In previous articles we discussed Basic insurance and Options A and B and various FEGLI rates. Now let’s talk about the third option under the Federal Employees Group Life Insurance – Option C. Option C is Family Insurance. As with Options A and B, Option C’s premiums are also based on age. Coverage continues into retirement and you pay the full cost of premiums.
Option C provides life insurance for your spouse and unmarried, dependent children, excluding foster children. Option C covers your spouse between 1 and 5 multiples of $5,000 and the children between the same multiples of $2,500.
With Option C you have two opportunities to make an election — first at retirement and shortly before your 65th birthday. Even if you are already 65, you still have two opportunities to make an election at retirement and shortly after retirement.
With Option C, you may choose two levels of coverage at first election: Full or No Reduction for all multiples. With Full Reductionq, at age 65 the amount of your Option C will start to reduce at 2% a month until it reaches zero.
However, if you chose No Reduction, at the first election, the full amount of your Option C will continue until your death unless you change to Full Reduction. At the second election, you can also choose Full or no Reduction for any or all multiples under Option C.
A Special Note: If you choose not to stop the future reduction of coverage when you reach age 65, your premiums will cease and your coverage will drop 2% per month for approximately 50 months, after this period your coverage will cease. If you choose not to end coverage, your premiums will continue.
Take your time in examining and understanding your options so that you will be pleased with the decisions you make to protect you and your loved ones.
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FEGLI – Option B
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.
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P. S. Always Remember to Share What You Know.
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FEGLI – Option A Standard
FEGLI Option A – Standard Insurance
The Federal Government offers 3 other insurance options and we’ll discuss each in separate posts. Let’s begin with Option A- Standard Insurance.
You are entitled to continue your Option A into retirement. Option A is worth $10,000 and the cost of coverage will be your full responsibility. Premiums do increase with age. With the second month after you reach age 65, or the second month after your date of retirement, if you are already 65, your Option A will be reduced by 2% of the $10,000 or approximately $200.00 per month until it reaches $2500. $2500 will be the amount paid as a death benefit. At age 65 premiums will cease.
Many federal employee wrongly assess that $10,000 will be payable upon their death. So we want to emphasize that the amount payable under Option A is $2500 upon your death. It is a good measure to discuss insurance options with your family members or someone you trust so that they will understand what to expect from your coverage and the benefits your survivors are eligible to receive.
When preparing for retirement ask all the questions you can think of that might help you reach your retirement goals and retire well. After all, it is your life and you deserve to have the best information possible to take you into your next new adventure with confidence.
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FEGLI Options
~~FEGLI OPTIONS
In a previous post we discussed the group life insurance, FEGLI, offered by the Federal Government to its employees. We talked about the Basic Life Insurance offered to federal employees. Let’s reiterate, at retirement your Basic insurance will be equal to your salary, rounded up to the next higher $1,000 plus $2,000. Under the Basic insuran
ce you may choose a 75% option whose cost remains the same as when you were an active employee until you reach age 65.
At age 65 your premiums cease and the value of your insurance declines by 2% per month until it reaches 25%. At your death, the benefit will be 25% of the original amount. If you choose the 50% reduction you will pay a higher premium until you reach age 65 or if you are already 65 at retirement. After which, your premiums will decrease monthly with the value declining by 1% per month until it reaches 50%. Therefore, the death benefit will be 50% of the original amount of the Basic life insurance.
If you choose the ‘no reduction’ option, which is slightly more expensive, your insurance will remain the same as it was when you retired. You’ll pay a slightly higher premium until age 65, and then your monthly premium will drop. This option allows your coverage to remain the same upon your death, paying the full amount as a death benefit.
Always talk to your human resources office or the plan administrator or a financial professional trained on your benefits to be certain you understand all the provisions of the life insurance you are choosing and the options.
P.S. Always Remember to Share What You Know.
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FEGLI – Term vs. Whole Life Insurance
FEGLI: Term Life Insurance and Whole Life Insurance – What’s the Difference?
This is a good segue to draw a distinction between term and whole life insurance. There are a number of very important issues about FEGLI (watch the video here) and how it works in retirement so that you will have all the information needed to put a plan in place that works for you.
Term life insurance is the category of life insurance offered to federal employees. It typically has no cash value. Term life insurance’s value decreases with age except under certain conditions we will discuss as we lay out the options available to federal employees – FEGLI Basic Life, FEGLI Option A, FEGLI Option B, and FEGLI Option C. Term Life Insurance covers the policy holder for a specific period (term) of time.
Whole Life Insurance typically has a cash value and is in force for the whole (all) of the policy holder’s life as long as the premiums are paid. Whole Life Insurance can allow for the policy holder to either cash it out or borrow against the policy. However any outstanding loans and accrued interest reduce the benefit payable upon the policy holder’s death.
It is always a good idea to talk to a licensed and knowledgeable financial professional about any questions you may have concerning your life insurance. Our posts are meant to educate and disseminate information that might assist in evaluating options available to you at retirement in your benefits profile. You will almost certainly benefit from working with an expert in making sure you get the most from your insurance expense.
Educate yourself by collecting, analyzing and evaluating information that will put you on the road to a comfortable and secure future. Seek out a FEGLI calculator and compare your FEGLI costs against private life insurance carriers. Know the parameters of your FEGLI policy and when you are better off with a different policy, so that you can increase your net retirement cashflow and RETIRE WELL.
P. S. Always Remember to Share What You Know.
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FEGLI – Some Basic Facts
Basic FEGLI facts
Federal Employees Group Life Insurance (FEGLI) can be transported into retirement. As with your Federal Employee Health Benefis (FEHB) each employee must meet the five year or earliest opportunity to enroll requirement to continue coverage into retirement.
If you fail to meet the time requir
ement prior to retirement, coverage will continue for 31 days at no cost to you with the option to convert to an individual policy. Employees eligible to continue coverage into retirement must elect to do so, it is not an automatic conversion.
The cost of your life insurance depends on a number of factors: your age, the amount of coverage selected, and health risk factors. If you decide to convert some or all of your policy, the good news is you will not be subject to a medical examination to qualify for conversion.
It should also be noted that there is generally no open season for FEGLI. However, in the rare instance where there is an open season, it is generally not open to retirees.
It should be further noted that accidental death and dismemberment coverage available to you as an active employee is not available to you in retirement as part of the government’s insurance program.
Know the facts about FEGLI as life insurance is a very important part of the planning process to RETIRE WELL.
P. S. Always Remember to Share What You Know.
Federal and Postal Retirement Planning
Let’s Talk FEGLI
FEGLI
FEGLI (Federal Employees Group Life Insurance) is Group Term Life Insurance offered to Federal and Postal employees. Federal and Postal Employees are offered a number of great benefits to help them take care of themselves and their families.
Life Insurance has long been thought of as protection for family members in the event of death, more of a burial insurance. Life insurance covers burial expenses or what I like to refer to as taking care of “the final business of our lives.” In addition to covering burial expenses, life insurance may also be used to cover other outstanding debt as well as provide for survivors.
The federal benefit plan is designed to provide its members with a comprehensive array of services to protect and enhance the lives of members and their families——–Health Insurance (FEHB), Vision and Dental (FEDVIP) coverage, a Pension plan, a way to save for retirement via the Thrift Savings Plan (TSP) and the means to prepare for the final business of our lives —life insurance.
We will discuss in later posts The Provisions of FEGLI, How FEGLI Works in Retirement and Life Insurance – WHY?
P. S. Always Remember to Share What You Know.
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Retirement Planning – Now or Later?
Retirement Planning
The most important step a Federal or Postal employee can take toward a successful retirement is recognizing how and when to begin the retirement planning process. As a FERS or CSRS eligible employee the earlier you begin educating yourself and gathering as much information as possible about how your benefits will work in retirement the better off you will be. Due to the complexity of the FERS and CSRS programs Federal and Postal employees may wish to speak with a financial expert who has a clear understanding of the FERS, CSRS, FEGLI and your TSP.gov account.
When is the ‘Right Time’ to start planning for retirement?
As the adage goes – The best time to plant a shade tree was 40 years ago. The second best time is right now.
Although our early years are not typically spent planning for retirement, they should be. Retirement planning is a very important component of the work-life cycle. The earlier we start building your nest egg (such as making contributions to your TSP.gov account), the longer it will be able to grow for you. Not only will your work and your savings begin to add up, but the compound growth that can take place over time means that your money is working for you. Reviewing your TSP.gov account regularly and making sure that your the investments and the ‘allocation’ you have matches your desired retirement plan is a must.
The first day of your first full-time adult job is when you should start your retirement planning. Don’t just take that myriad of papers handed to you by Human Resources and stuff them in your desk drawer. Read them, ask questions and learn what you can do right away. And absolutely, make contributions to your TSP.gov account.
Although it is never too late to start preparing to retire well, the earlier we start the greater our options and opportunities to design the kind of life we want to live in retirement. Your TSP.gov account and other investments are important when you are younger but they grow even more important as you get closer to retirement. This is when a financial professional can help you ensure that your retirement goals and income needs will be met.
P. S. Always Remember to Share What You Know.
Will your income will be enough in retirement?
Are your TSP funds getting you to where you need to be?
