FEGLI OPTION B – Additional Insurance

FEGLI: Option B – Additional Insurance

FEGLILet’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

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