Life insurance eliminates financial uncertainty associated with the death of a breadwinner. If you work for the federal government, you should consider getting this financial safety net through Federal Employees’ Group Life Insurance (FEGLI). The program lets you select the right amount of coverage for your needs. Here’s a look at the FEGLI program and how it can benefit you and your family.
What Is Federal Employees’ Group Life Insurance?
FEGLI is a group term life insurance program for federal employees and retirees. It was established in 1954 and covers over 4 million individuals today. When you sign up for one of the available plans under the program, your family is protected.
Covered beneficiaries can file claims with the Office of the Federal Employees’ Group Life Insurance (OFEGLI). This is a private company that the federal government contracted to pay FEGLI death benefits.
Unlike whole life insurance policies, none of the FEGLI coverage options includes a cash value component that you could tap into while still alive.
FEGLI Coverage Options
As with any life insurance policy, it’s up to you to decide the amount of insurance you need. Fortunately, the FEGLI program provides four options that meet different coverage requirements. These are:
- Basic life insurance coverage (automatic enrolment)
- Three optional coverages that increase your insurance amount
Only federal employees with Basic life insurance can choose from any three options.
How to Enroll in FEGLI
FEGLI Basic life insurance enrollment is automatic once you become a federal employee. Your payroll office will immediately start deducting premiums from your pay. However, basic coverage is not mandatory, so that you can waive it. To add any optional coverages, you must apply within 60 days from being appointed as a federal employee.
How Much Does a FEGLI Plan Cost?
Your FEGLI costs will depend on your coverage type. Basic insurance is the cheapest and has some advantages compared to optional coverages. These include:
- Cost-sharing: The government pays 1/3 of your total premiums while you pay 2/3.
- Premiums are not age-dependent: Your age does not affect Basic insurance coverage costs.
In contrast, the government does not chip in to lower optional FEGLI premiums. Instead, you’ll bear the total cost when you sign up for the extra coverage. Also, your age is factored in calculations for your optional life insurance rate.
How to Estimate Your FEGLI Coverage Needs
Your future financial responsibilities will determine the amount of FEGLI you need. While each individual has unique coverage requirements, there are certain basics that every federal employee should consider before signing up for a FEGLI plan. Of course, the most important consideration for most policyholders is the funds that their survivors will need for immediate expenses like:
- Final expenses
- Uncovered medical costs
- Debts like mortgages
- Taxes
Even if you are young and single, you can still use life insurance protection. Remember that funeral costs are a financial emergency that could amount to thousands of dollars. It would help if you made a provision for it in some way.
Once you’ve figured out your life insurance coverage needs, you can choose an appropriate FEGLI plan. Before that, consider using the FEGLI calculator to compare coverage costs and benefits. The online tool can help you:
- Work out the death benefit of different FEGLI coverage combinations
- Estimate the costs for various coverage combinations
- Assess how each option impacts the face value and cost
- Predict the effect of retirement on your FEGLI coverage
Are you a federal employee looking to maximize life insurance coverage for you and your loved ones? If so, contact us at Premier Protection today. We take delight in helping you find the right safety net for your future financial responsibilities.
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