Essential Things to Think About for Life and Long-Term Care Insurance (FEGLI and FLTCIP)
The Federal Employee Group Life Insurance program, or FEGLI, is one of the many FERS benefits available to federal employees. You can get group life insurance while you’re employed, and under some circumstances, you might be able to keep using it after you retire.
Young federal employees are urged to get life insurance via FEGLI if needed, especially if they have a family or would leave someone else to care for if they pass away. The amount of insurance you require varies based on several factors, but FEGLI is affordable and can typically be afforded at the highest level when younger. FEGLI becomes more expensive as you age and may no longer be affordable, especially if your retirement plan predicts that you’ll also need long-term care insurance coverage.
The Importance of Life Insurance
Both young and old may find life insurance to be helpful. The most common life insurance application is to replace lost income while working. FEGLI is the most affordable option for meeting this demand while employed. Term insurance offers the next best instant price.
It’s crucial to remember that there are various schools of thought regarding the appropriate amount of life insurance. What would you wish you had done to support your family after you passed away? Replacing the financial resources you would have otherwise contributed is one straightforward solution. Many people want to use their early death to pay off their home and their children’s college loans.
Another way to look at it is to ensure that the current objectives are still reachable for those you leave behind.
Your FERS pension is secure as a qualified federal employee up until the time of your passing. Your surviving spouse could receive up to 50% of your FERS annuity if you chose the survivorship benefit. Over time, that loss can become substantial, reducing one of your Social Security benefits, particularly if one spouse passes away significantly sooner than the other.
Term insurance provides life insurance for a set amount of time (term). This can often be purchased in 5-year installments between five and 30 years. Utilizing this to cover a particular risk at certain points in your life is preferable. If both of you pass away or just one of you, things like having money set aside for mortgage payments, student loans, preschool, college, weddings, etc., would be helpful.
Renewing is pricey beyond your “term.” Insurance companies may occasionally allow holders of term policies to upgrade to a permanent policy at the age they reach without undergoing additional medical testing. Your advanced age may significantly raise the expense of waiting. Furthermore, the policy you would select today and the policy that would be presented to you upon conversion might not be the same.
Considering Long-Term Care Insurance
One vital thing to remember is that neither the FEHB nor Medicare will pay for lengthy long-term care requirements. A Medicare component covers the initial few months of an event, but any expenditures incurred beyond that are your own.
Long-term care events often last two to three years. At this point, you may need to live in an assisted living or skilled nursing facility, or you may need assistance from caregivers who visit your home. The duration of long-term care events has occasionally increased to five or six years due to advancements in medical care.
A long-term care event may be self-insurable for some families with no problem. These prices may vary significantly depending on where you live and the type of service you receive.
FLTCIP first seems to be a reasonable purchase, but its price gradually rises over time.
The Premium Stabilization Feature (PSF) of FLTCIP is one great advantage. These conventional long-term care insurance policies typically have prohibitive costs as you get older. Due to the expense, many families renounce their insurance just as their children reach the age when they most need it. Long-term care insurance costs typically increase dramatically over time, but not when they are included in specific insurance policies. The PSF for FLTCIP is determined by taking a percentage of the premiums paid for the FLTCIP 3.0 group policy.
The PSF amount may reduce your future premiums or result in a premium death benefit reimbursement. If you haven’t opted out, are 85 years old or older, and have participated in FLTCIP 3.0 for at least ten years, you are eligible for this. Additionally, you need to have enough PSF to cover 50% of your monthly premiums for the upcoming 12 months or longer. The premium refund death benefit is calculated based on your coverage at the time of your death. The remainder would go to your beneficiary.
Insurance prices may be less high the earlier you plan and get the coverage you require. But this does not imply that you should buy insurance right now. It involves attention, study, and must-have features that suit your needs, just like purchasing a car.
Similar to purchasing a car, if you’re not diligent, insurance too might have a lot of unnecessary and hidden charges. Certain carriers specialize in various types of insurance. Some have ideas that work well in one area but poorly in another. As your future is at stake, be sure your advisors are having these crucial conversations with you.
Contact Information:
Email: [email protected]
Phone: 2129517376
Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementing a sound plan for your retirement. We are committed to helping you achieve your goals. Visit us at MarvinDutton.com . Tel. 212-951-7376: email: [email protected].
