fegli calculator
When to Use the FEGLI Calculator
First published on CompareFEGLI.com
When to Use the FEGLI Calculator
You won’t often be called upon to calculate your coverage amount and premium for your Federal Employees’ Group Life Insurance (FEGLI) life insurance.
There are three reasons why you might need to use the FEGLI calculator. The first time will be when you are hired as a federal employee, and then on the rare occasion that you get to modify your FEGLI coverage amounts and options.
For the record, this is only possible when there is a FEGLI Open Season, or when you are able to submit evidence of a qualifying life event (QLE) that makes you eligible to modified FEGLI coverage and options.
The third time you will need the FEGLI calculator is when you retire. FEGLI rates and coverage change quite a lot post-federal retirement, so you will need to know the changed premiums and reducing coverage amounts.
How to Use the FEGLI Calculator…….. Read More
Other FEGLI Articles
What is FEGLI Option A, Option B and Option C?
Evaluating your life insurance policy by Todd Carmack
Converting FEGLI to Individual Life Insurance After Separation From Federal Service
Let’s Talk Federal Employee Life Insurance (FEGLI)
Federal Employees Life Insurance – FEGLI.
This is really great stuff. Ever so often I talk about being inspired by a conversation or a question I have been asked. I don’t know why I deserve so many flowers. Each time I am inspired by someone, I consider it a flower, a rare and precious gift because that what being gifted with knowledge is. Today I was coaching a Federal employee about her FEGLI coverage and received the most wonderful gift from her when she said, “Now I am a full grown woman and this is the first time in my life that life insurance has really been explained to me.”
I was happy she had gotten what she needed, but disappointed that my profession, Human Resource Management of which benefits fall, had not done its job. I am very sensitive about the role of Human Resources and its awesome responsibility to a workforce. It is the Office of Personnel Management (OPM) that is charged with human resources oversight for the entire Federal Government. It is not the State Department or Treasury. Those agencies have another mission. So when employees tell me that Human Resources has not filled in the knowledge gaps about their benefits, I get a little concerned.
The Federal employee who is one of the best strategists I have ever met, wanted to know the difference between term and whole life insurance. That’s a great question since the Federal Government offers term life insurance (FEGLI) as a part of the Federal benefits package. We had some light banter about what could be done to ensure employees had enough information about their benefits to make informed decisions. I suggested employees engage Human Resources offices more, inundate them with questions. She said what good will it do if they don’t know the answers to my questions. She further stated that the Federal Government lost a lot of institutional knowledge about 20 years back when a number of highly-trained HR specialists retired.
I am not going to agree or disagree with that premise. I will say that the employee’s premise is one of the strongest arguments I have heard to support the extreme importance of effective succession planning. Employees in organizations are supposed to be like perpetual revolving doors. As one leaves and another enters only the body is vacating the premise, it should not be the knowledge required to do a job and the guaranteed continuity of service provision that is vacating the premise. People are not indispensable, they just aren’t and it benefits no industry to act as if they are.
All employees should be respected in the workplace and treated with a great amount of dignity. Employees should be applauded for their skills and abilities and rewarded. However, no single employee should be in control of the conch (shell) as in the novel, Lord of the Flies. The conch represented order and structure. Having knowledge begets order and structure. When employees do not have the prerequisite knowledge, order and structure is at risk so evident when people leave organizations having not properly passed the torch of knowledge. The civilization is left in disarray and order and structure is sacrificed.
We look to the Federal Government for order and structure. Therefore, Federal employees must not accept the rationale that the people who knew the information are gone and all is lost, but must demand that information keeps flowing no matter who leaves the beach. I got the opportunity in the end to tell her very precisely the difference between term life insurance and whole life insurance. Very simply I told her that term life insurance tends to be less expensive than whole life and it does not have a cash value, Most importantly, its value decreases with age, except if you choose a no reduction option in your federal benefits. Whole life insurance has a cash value and can be more costly. It is better to get insurance when you are young because the older you are, the more premiums tend to cost because of risk associated with aging.
She also asked if she should purchase the Government’s long-term care (LTC) insurance. I told her that LTC becomes pretty pricey after age 50. I suggested she be a wise consumer and check costs on the open market, compare rates with what the Feds are offering and make a decision before age 50. I am most willing to share information because that is what my profession dictates. However, individual choices are just that. You should only make decisions based on whether it is a fit or not.
P. S. Always Remember to Share What You Know.
Dianna Tafazoli
Recommended Articles
For Postal Employees – LiteBlue and the TSP
Federal Retirement Benefit Analysis
Is The Pension Survivor Benefit Best For You? by Todd Carmack
A Little-Known Opportunity Can Increase Your Retirement Income. by Mark Sprague
Understanding Your FEGLI Coverage, by Todd Carmack
As a benefit counselor and retirement income specialist, I have come to realize that a lot of employees do not remember what they signed up for or understand their federal employee group life insurance (FEGLI) coverage.
Basic FEGLI Coverage
Basic FEGLI coverage, if elected, FEGLI Basic coverage provides a death benefit based on your gross salary, rounded up to the nearest thousand and then $2000 is added to that figure. Example, if you make $51,486, your death benefit would be $54,000. At age 65, Basic FEGLI coverage becomes free and the coverage will reduce down by 2% per month until it reaches an ultimate reduction to 25%.
Employees do have the option to elect NO FEGLI Reduction or a 50% FEGLI Reduction. If elected, there is a premium payment required to maintain your FEGLI coverage.
FEGLI Option A
FEGLI Option A is a flat $10,000 death benefit. At age 65, coverage is free and will reduce by 2% a month until it reaches $2500.
FEGLI Option B
FEGLI Option B is optional FEGLI coverage provides 1,2,3,4,or 5 times your annual salary as a death benefit. Example – if your salary was $51,486, and you chose 5 times your salary, your death benefit would be $260,000 ($52,000 x 5). This option can become very costly after the age of 50. The cost or ‘premium’ paid to maintain FEGLI almost doubles every 5 years. At age 65, you may elect to reduce coverage by 2% a month for 50 months until it reaches 0, or continue to pay premiums.
Because of the higher premium costs after age 50, it may be in the employee’s best interest to consider looking for a level term insurance plan in order to reduce the monthly premium over time. A great resource I’ve found for reducing your FEGLI expense is www.CompareFEGLI.com.
FEGLI Option C
FEGLI Option C is optional coverage provides a death benefit for your spouse and eligible dependent children (under age 22). There are multiples of 1-5 available. The FEGLI coverage amount is increments of $5000 for spouse and $2500 for each child. Example – if you chose a multiple of 3, there would be $15,000 of coverage on spouse and $7500 coverage on each child.
At age 65, you may choose to reduce coverage by 2% per month until it reaches 0, or continue to pay premiums.
About the Author
Todd Carmack
Arizona
Other Todd Carmack Articles
Understanding The Thrift Savings Plan, by Todd Carmack
Social Security for FERS Employees, by Todd Carmack
Is The Pension Survivor Benefit Best For You? by Todd Carmack
Disclosure: BWM Advisory, LLC reserves the right to edit blog entries and delete those that contain offensive or inappropriate language. Content will also be deleted that potentially violates securities laws and regulations. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. All investment strategies have the potential for profit or loss. Hyperlinks on this website are provided as a convenience. We cannot be held responsible for information, services or products found on websites linked to ours. BWM Advisory, LLC is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
Plan Building: How Do I Get Started?
~~HOW DO I GET STARTED WITH A PLAN?
By now you are probably asking – How do I get started setting goals that are SMART and putting a plan into action? You get started by first simply writing down what you desire your retirement picture to reflect. Write down your goals, evaluate and analyze them so they fit your circumstances and values.
Create a strategy that is doable with short, intermediate and long-term goals with time horizons that are based in reality. Make certain that the plan you create can be put into action without causing undue stress on your emotional and financial well-being. Lastly, make room to monitor and track the movement of your plan, leaving time and space to modify the plan as circumstances and conditions change in your life both for you and your family.
A plan that starts out SMART ends with giving you in retirement the lifestyle you desire and deserve.
P. S. Always Remember to Share What You Know.
FEGLI – Option C
~~FEGLI – OPTION C
We are just about done. We have discussed the terms of Basic Life Insurance, Option A-Standard Insurance and Option B- Additional Insurance. Let’s continue with the discussion – FEGLI Option C –Family Insurance.
Many of the same provisions in Option B are also applicable in FEGLI Option C. For example, individuals 65 years of age or older at retirement will be contacted by OPM very soon after retirement. Individuals who retired before reaching age 65 will be contacted by OPM a short time before they reach age 65 to discuss elections.
Individuals with Option C – Family coverage can choose either Full Reduction or No Reduction for each separate multiple. The decision might be to choose No Reduction for some multiples and choose Full Reduction for the remaining multiples.
If you choose Full Reduction and you retired before April 24, 1999, two months after you reach age 65 or your retirement date which ever comes later, on the first day of the second month; Option C will decrease by 2 percent of the original face value every month for 50 months. After that time, coverage will cease. Premiums will be withheld from your annuity until the month in which you reach age 65.
If you elect to keep some or all multiples under No Reduction, adjustments to your premium will be made to reflect the election made.
It is always a good idea to check and double check your choices to make certain you are satisfied with the options you have chosen.
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 OPTION B – Additional Insurance
FEGLI: Option B – Additional Insurance
Let’s take our time in walking through the provisions of FEGLI Option B, which can be a bit more involved than Option A- Standard Insurance and Basic Life Insurance. If you are considering maintaining life insurance coverage into your later working years and certainly into retirement, you NEED To know about your FEGLI Option B and what other comparisons might be available for you.
FEGLI Option B: There is no minimum coverage for Option B. The coverage is simply calculated on the stated salary of the employee with no minimum ($10,000) as it is in the case of Basic Insurance. If an employee’s salary is less than $10,000, the FEGLI basic insurance amount (BIA) of coverage would still be $10,000 under Basic Life Insurance.
The cost of Option B Additional insurance is the responsibility of the retiree. Retirees have the option as of April 24, 1999, to elect to make an Option B reduction. If you are age 65 or older at retirement you will be contacted by OPM about making your elections not long after you retire. Retirees who retire prior to reaching the age of 65 will be contacted by OPM concerning their elections shortly before they reach age 65.
If you are older than 50 it is incredibly important that you compare FEGLI rates against other life insurance options. FEGLI rates rise dramatically after a certain age and you will almost certainly be able to find a cheaper policy over the long run. If you plan to hold insurance into retirement (and many people do, especially those who want to protect their loved ones) then a great way to enhance your retirement is to compare your FEGLI rates and reduce your costs – “a penny saved…..” This holds true for both Federal and Postal employees. You should compare your FEGLI Rates online by searching for FEGLI comparisons and/or FEGLI Calculators to find out what other options are available for you. You may also want to find a local insurance professional that is knowledgeable in your benefits prior to making your final selection (almost always a good idea).
Whether you are 65 or older at retirement or have not yet reached age 65 the option to elect Full Reduction or No Reduction for each separate multiple is within your right. Let’s demonstrate what is meant by choosing Full Reduction or No Reduction for each multiple separately. Individuals choosing Additional Insurance – Option B can choose 1, 2, 3, 4 or 5 multiples of their annual rates of basic pay. If the basic pay is $68,595 rounded to the next $l, 000, then each multiple is valued at $69,000. You might decide to choose No Reduction on 3 and Full Reduction on the remaining 2 or visa-a-versa.
For those multiples you elect a Full Reduction, two months after you reach age 65, on the first day of the second month or on your retirement date which ever comes last, your Option B Full Reduction multiples will decrease by 2 percent of the original face value each month for a total of 50 months and then the coverage will end. Premiums will be withheld from your annuity until the end of the month in which you reach age 65.
If you choose No Reduction upon reaching age 65 or at retirement whichever comes last, then the premiums withheld from your annuity will be adjusted to reflect the number of multiples you have chosen. You have the option to choose No Reduction on some or all multiples. You have the same choices whether you choose Full Reduction or No Reduction on some or all of your multiples. If there are multiples that you do not choose or indicate No Reduction, then those multiples will begin to decrease by 2 percent of the original face value each month for a total of 50 months and then the coverage will end.
The best way to gain satisfaction from the choices you make as you prepare for retirement is to take it one step-at-a-time, making sure you understand all of your options completely. If you still have questions, you are at the right place to get them answered while you are still an active employee. The only questions about FEGLI that are not valuable are the ones you don’t ask.
P. S. Always Remember To Share What You Know.
Click HERE for information on FEGLI
Click HERE for information on Option B
Click HERE for information on Financial Planning
FEGLI – 75% Reduction Election
FEGLI: 75% Reduction
There are some dates or time periods that are important when discussing FEGLI. Although, we are clearly in the year 2014, I am still going to discuss dates prior in the event retirees or family members of retirees are a bit unclear about what is happening with the life insurance carried into retirement from the federal service.
If you retired prior to December 9, 1980, your BASIC FEGLI coverage (watch the video) begins to decrease by 2 percent of the face value every month starting with the second month after you reach the age of 65 or when you retire whichever comes later. The decrease in face value continues until it reaches 25 percent of the original face value. The coverage is free.
If you retired on after December 9, 1980, but prior to January 1, 1990, you would have elected a reduction of 75 percent, 50 percent or No Reduction. This is where we can be clearer so that there is a complete understanding of the elections with no confusion.
Let’s talk about what the 75 percent reduction election means. If you chose the 75 percent reduction during the periods outlined, your BASIC life insurance will begin to decrease in face value by 2 percent every month starting with the second month after you turn 65 or your retirement date, whichever is later. The decrease is ongoing until it reaches 25 percent of the original face value. This insurance coverage is free for you. You pay no premium.
I am a huge proponent of – it is easier by the inch than the mile. For that reason, I am going to discuss each percentage reduction election separately. I think we will have a better understanding if we do it that way. Agreed?
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)
More On FEGLI
Each time I think I have said enough about FEGLI, someone or something always reminds me that I have not, or at least I could be a bit clearer on certain aspects of FEGLI.
Over the weekend, a friend called for some advice on her pending retirement. We started to talk about FEGLI (watch the video) and her understanding of elections and goals for life insurance. Right off, she wasn’t sure about what she had and how it worked and if she elected reductions or named a beneficiary(s).
The point being she is about 4 months from deciding on an exact date to retire and one of the most important aspects of her planning process remains vague. There is no denying, there is no easy way of getting around understanding your benefits and what they mean in retirement. She is doing the right thing; she is talking NOW about what she does not understand about her benefits.
Many employees are missing out on a great opportunity to engage their human resources offices and gather as much information as possible about their benefits in retirement. Your agency human resources office has your folder and they can answer so many critical questions and help you via the wonderful online calculators and e-tools to estimate what your annuity from your years of service will look like in retirement.
Another important issue she unearthed was not having a full understanding of her TSP being separate from the pension (annuity) she would receive upon retirement. She also did not have a clear understanding of whether she had named a beneficiary on her TSP account.
Some of her issues were easy to resolve. First, if you are planning to retire, you should not bother yourself about whether you named a beneficiary or even who it was. So many changes take place in our lives over the course of our work careers that the easiest approach to the beneficiary question – is to do a completely new set of forms as part of your retirement check-up list.
Many of us enter into the federal service very young and we make our choices and designations, often not revisiting those forms for a very long time, if ever. This was certainly the case with my friend, even some of the designees she named had passed away.
Getting ready for retirement is a huge undertaking so wherever you can simplify the process, do it. Take the fuss out of what you did not do and what you thought you did and just complete a whole new set of forms for FEGLI. Also contact the Thrift Savings Plan (TSP) and complete a new set of forms with the TSP as well.
We are going to discuss and clarify a couple of things about FEGLI to follow.
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 Order of Precendence
FEGLI: Order of Precedence
Now that we have discussed how a death claim will be paid. Let’s discuss to whom the death benefit will be paid. The Federal Government uses what is termed an Order of Precedence. The FEGLI Order of Precedence has no attachment to your Will. The Federal Government does not get involved in Wills and Probate. Instead, if there is no assignment of your FEGLI (Life Insurance) and no valid court order exists then the order is as follows ranging from first to sixth and in that order:
1. Designated FEGLI Beneficiary(s).
2. If no designation – widow or widower
3. If neither 1 nor 2 exists, your FEGLI will pass to the child or children. If any child or children is deceased, then equal shares will be paid to the descendants of the deceased child or children. If minors are involved, then the court will usually appoint a guardian to receive payment for the minor children.
4. If the above situation does not exist, then to the parents in equal shares or the whole to the surviving parent.
5. If none of the conditions above exists, then to the administrator or executor of the estate.
6. If all five of the conditions do not exist, then the next of kin as designated by the State in which the deceased lived – not the state in which the deceased died.
When planning your retirement future, it is important to gather and understand as much information as possible. Discuss the information with family and loved ones you trust. You can also check with your HR office about your current beneficiary designations and possibly with a qualified local FEGLI expert who can help you with your insurance selections and decisions.
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.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
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.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
P. S. Always Remember to Share What You Know.
www.psretirement.com
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.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
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.
Click HERE for information on FEGLI
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.
www.psretirement.com
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.
Click HERE for information on Retirement Planning
Click HERE for information on FEGLI
Click HERE for information on TSP.gov login
Click HERE for information on FEGLI Calculator
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.
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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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