When you initially started working for the federal government, you were handed a bundle of paperwork to sign. It was probably similar to when you went to buy your house, which you may not have fully understood what you were signing.
You were likely given the opportunity to sign up for Federal Employees Group Life Insurance (FEGLI) among those papers. Your FEGLI Basic benefit was almost equal to your wage under this program – even more if you were under 45.
In the meantime, your FEGLI premiums climbed over time as you worked. You might not have noticed these gains because they were so gradual, probably because your pay increased in tandem with your premiums, masking the cost increase.
If you’ve been a federal employee for a long time and are now ready to retire, you might be startled to learn that taking your FEGLI into retirement will be highly costly. This is especially true if you choose to keep everything.
Understanding “FEGLI’s trap”
While you’re working, your FEGLI coverage has been so handy and reasonable that you don’t consider other options for retirement, and it arrives just when you need it the most. You only realize it when it’s too late.
FEGLI was created to provide coverage at a reasonable cost while you are working. It was never meant to be a long-term life insurance policy that you would keep indefinitely.
Here are 4 steps to take right now to avoid falling into the FEGLI trap:
1. Determine the quantity and cost of your current FEGLI coverage.
2. Estimate the increase in premium costs.
3. Check to see if this is the right life insurance policy.
4. Determine alternatives to your present FEGLI coverage and their costs.
What to Avoid?
Based on your judgment, you should ensure that any other policy you purchase is in force before canceling your other coverage. Do not drop your coverage because FEGLI becomes prohibitively expensive in retirement. If you don’t qualify for added coverage and have no other options, you will regret your choices. You want to ensure that you have every chance of having enough coverage.
What specific role does FEGLI play?
Of course, FEGLI is only one element of the puzzle. As you get closer to retirement, you’ll need to evaluate all of your benefits.
Contact Information:
Email: [email protected]
Phone: 8139269909
Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.
Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.
