FEGLI Coverage for Federal Retirees

You have several options if you are enrolled in Federal Employees’ Group Life Insurance (FEGLI) at retirement. It would be best to start by specifying which advantages you wish to maintain. The second consideration is your maximum budget for them.

Basic Insurance

You would have been covered if you hadn’t turned down the basic insurance when you were hired. This benefit is calculated by rounding up your Basic pay (the amount from which retirement deductions are taken) to the nearest $1,000 and adding $2,000. Your insurance premiums will increase proportionally to your income. The government will cover two-thirds of the cost of your premiums.

At retirement, you can choose a 75% reduction in your Basic insurance, a 50% reduction, or no change at all. If you select the 75% discount, your premiums for that coverage remain the same as they were while you were an employee. You’ll keep paying them until you reach age 65. After age 65, you are no longer required to pay premiums. However, your Basic insurance will lose 2% of its value per month until it is only worth 75% of its original cost.

If you go with the 50% discount, you’ll lose 1% of its value each month until it’s worth half as much as it was before. However, your premiums will need to increase to receive this better perk. If you decide against the discount, your premiums will increase significantly.

There are three additional types of life insurance besides the Basic policy. This article will go over them in depth.

Option A: Standard Insurance

Option A is the least expensive life insurance policy accessible to you. It’s an extra $10,000 in coverage, with the cost rising every five years. Assume you have Basic insurance and have spent $10,000 on optional coverage on your own. In that case, your optional coverage will terminate at the end of the calendar month you turn 65. Your Option A insurance will decrease by 2% per month until it reaches 25% of its initial value. Unfortunately, unlike other choices, FEGLI Option A does not allow you to choose a different reduction strategy. It will decrease to $2,500 in coverage at retirement or at age 65.

For instance, assume you are a 45-year-old federal employee with an annual salary of $84,500 and a plan to retire at 60. While you’re working, your BIA and coverage will be $87,000. If you retire before age 65, your coverage and costs will remain the same. However, your coverage will be reduced to $21,750 over the following 50 months once you turn 65, and it becomes free. After retirement, you may get only a fraction of your current life insurance.

Option B: Additional

If you chose Option B, the cost of your coverage would be determined by a multiple of your annual base salary, rounded up to the nearest $1,000. You can keep the coverage you had as an employee after retirement. If you keep that coverage, you’ll be responsible for the total premium, which will only go up as you get older. To cut down on the price, you can either reduce the number of multiples or let the dollar value of the coverage decrease starting at age 65 at a rate of 2% per month for 50 months.

Choice C: Family

With Choice C, you can cover your spouse and qualifying dependent children at your own cost, all under one policy. As with Option B, you can choose as many as five different levels of coverage for your spouse and children, with each level equaling $5,000 in total. How much you pay per month for your premium is based on your age. After age 65, however, coverage automatically decreases by 2% per month for 50 months until it reaches zero, and then it’s free forever.

Final Thoughts

There are other options besides the FEGLI program for those needing affordable life insurance. You can buy different kinds of life insurance in the private sector. You can invest in the Thrift Savings Plan and other ways and buy long-term care insurance through the federal FLTCIP program or other insurers.

You’re free to choose the proportions. Do not put off choosing until the last minute.

Contact Information:
Email: [email protected]
Phone: 3039011337

Bio:
PRESIDENT,
(FRC) FEDERAL RETIREMENT CONSULTANT
Caine Crawford Sr. uses his more than 20 years of experience in the financial services industry to help Federal Employees throughout the United States with their Benefits and retirement needs. Caine is President and Lead Benefits Counselor for the Federal Employee Advocacy Group, based in Denver Colorado.

When Caine’s father sought to retire from CSRS, he came to Caine for help. It was then that Caine discovered a lack of financial resources readily available to federal employees, and he sought to become better informed to help others. Caine met with his first GSA client in 2008, and he was shocked to learn that client truly did not know what to do with a thrift savings plan (TSP) after retirement. Following that meeting, Caine founded Federal Employee Advocacy Group and became laser-focused on helping federal employees maximize income and benefits while minimizing expenses and taxes.

Caine teaches Federal Benefits and Retirement workshops for Federal Agencies, all across the Country. He understands federal benefits can appear somewhat complex and lack clarity. By creating a custom benefit analysis, Caine pinpoints the gaps in clients’ current plans, maps out TSP growth based on historical data and ensures clients have a lifetime of income and a dignified retirement.

Caine has now published his book, The Educated Fed: Your Guide to Understanding & Maximizing Federal Benefits. The Educated Fed is a self-help book for federal employees who want to learn how to maximize their federal benefits for retirement. Inside you’ll find answers you didn’t even know you had questions for…With the help of a retired Department of Defense employee, Caine will walk you through all of the moving parts that are your federal benefits and show you which ones you have control of, which ones will make you money, and which ones could cost you. Even though we’re in the information age, we’ve found out that an “informed” federal employee is not as well positioned as an “educated” federal employee. The Educated Fed aims to address the gap between information and real education that we observed in teaching hundreds of federal benefits workshops across the country for numerous agencies.

Caine graduated from the University of South Carolina with a Bachelor of Science in finance. He then lived in Colorado for 25 years before moving with his family back to South Carolina to live near a lake. He and his wife have four children and enjoy spending time together when they can among their busy schedules. Caine also enjoys coaching lacrosse at the local high school.