Without the requirement of any underwriting statement, all Federal Employees have access to the Federal Employee Group Life Insurance. This life insurance serves as a competitor to traditional Death Benefit Protection, designed for young employees. Since the insurance does not require any medical underwriting, employees without significant health concerns may also not find this life insurance beneficial. Because once they are 45 years, the insurance cost will increase exponentially for their remaining years of service, even until they retire.
For each participant, the Federal Employee Group Life Insurance cost will increase by 2066% between ages 30 and 65. This 2066% rise also applies to chain smokers and marathon runners. People without other insurance options need to use the FEGLI if they want to provide a legacy for their relatives. However, more than ninety percent of federal employees have multiple alternatives that will protect them, their family, and retirement at the same time.
When you are evaluating your coverage, you should consider these three factors if you want to know whether the FEGLI is the best fit for your life and career.
Qualification through the underwriting process.
Suppose you want individual protection, which depends on your age, lifestyle habits and health status. In that case, you must pass through the underwriting process.
The time limit for the protection need.
Most federal employees use the FEGLI coverage in their 50s and 60s, but not every employee needs life coverage. When you want to define your time limit, you can compare your current FEGLI coverage cost with the projected coverage cost when you are 65.
Determine your life insurance need.
The third factor requires you to identify what you want to use your life insurance for so that you can get maximum protection from your insurance.
The Federal Employee Group Life Insurance Program was made to offer a traditional death benefit to federal employees. The program is among the most prominent policies in the world. The program is designed as an innovation of the Q-tip industry.
We now have current life insurance strategies, known as Accelerated Living Benefits Riders, which come with excellent features. It protects the insured even while they are alive. Despite being alive, some health conditions like stroke put one in a critical medical emergency. During this period, the individual's need for money increases, while income decreases as the individual recovers. If you are in this condition, how will you pay your bills? With the Accelerated Living Benefit Riders, you can accelerate the use of your death benefit even when you are alive if you have been in a critical medical condition.
The FEGLI only gives you a death benefit, and you cannot access the coverage while you are still breathing. If you have a critical medical condition, you have no option but to take a hardship withdrawal from your TSP.
Suppose that you don't have enough emergency funds and sick leave. Taking the hardship withdrawal from your TSP will cost you some money as taxes and an additional early distribution penalty of 10%. Taxes and other reductions to your TSP will eventually affect your retirement plan if you don't have any alternative than taking the hardship withdrawal.
Due to the rapid growth in medical innovation, many people are re-evaluating their need for a life insurance policy just in case they live after their present ailment. You can take a flexible approach, whereby you combine both the living benefit rider and life insurance. This flexible approach works as a single policy and guarantees payments of the death benefit to your beneficiaries. This available flexible policy helps you cover the cost of aging concerns, like nursing home care. It also addresses critical medical conditions such as stroke, heart attack and cancer while giving a death benefit legacy to your relatives. Your family can receive the death benefit only if you have not accelerated it before your demise.