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.