Not affiliated with The United States Office of Personnel Management or any government agency

Not affiliated with The United States Office of Personnel Management or any government agency

Understanding Your FEGLI Coverage, by Todd Carmack

FEGLI CoverageAs a benefit counselor and retirement income specialist, I have come to realize that a lot of employees do not remember what they signed up for or understand their federal employee group life insurance (FEGLI) coverage.

Basic FEGLI Coverage

Basic FEGLI coverage, if elected, FEGLI Basic coverage provides a death benefit based on your gross salary, rounded up to the nearest thousand and then $2000 is added to that figure.  Example, if you make $51,486, your death benefit would be $54,000.  At age 65, Basic FEGLI coverage becomes free and the coverage will reduce down by 2% per month until it reaches an ultimate reduction to 25%.

 

Employees do have the option to elect NO FEGLI Reduction or a 50% FEGLI Reduction.  If elected, there is a premium payment required to maintain your FEGLI coverage.

 

FEGLI Option A

FEGLI Option A is a flat $10,000 death benefit.  At age 65, coverage is free and will reduce by 2% a month until it reaches $2500.

 

FEGLI Option B

FEGLI Option B is optional FEGLI coverage provides 1,2,3,4,or 5 times your annual salary as a death benefit.  Example – if your salary was $51,486, and you chose 5 times your salary, your death benefit would be $260,000 ($52,000 x 5).  This option can become very costly after the age of 50.  The cost or ‘premium’ paid to maintain FEGLI almost doubles every 5 years.  At age 65, you may elect to reduce coverage by 2% a month for 50 months until it reaches 0, or continue to pay premiums.

 

Because of the higher premium costs after age 50, it may be in the employee’s best interest to consider looking for a level term insurance plan in order to reduce the monthly premium over time.  A great resource I’ve found for reducing your FEGLI expense is www.CompareFEGLI.com.

 

FEGLI Option C

FEGLI Option C is optional coverage provides a death benefit for your spouse and eligible dependent children (under age 22).  There are multiples of 1-5 available.  The FEGLI coverage amount is increments of $5000 for spouse and $2500 for each child.  Example – if you chose a multiple of 3, there would be $15,000 of coverage on spouse and $7500 coverage on each child.

 

At age 65, you may choose to reduce coverage by 2% per month until it reaches 0, or continue to pay premiums.

 

About the Author

Todd Carmack

Arizona

 

Other Todd Carmack Articles

Understanding The Thrift Savings Plan, by Todd Carmack

Social Security for FERS Employees, by Todd Carmack

Is The Pension Survivor Benefit Best For You?  by Todd Carmack

 

Disclosure: BWM Advisory, LLC reserves the right to edit blog entries and delete those that contain offensive or inappropriate language. Content will also be deleted that potentially violates securities laws and regulations. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. All investment strategies have the potential for profit or loss. Hyperlinks on this website are provided as a convenience. We cannot be held responsible for information, services or products found on websites linked to ours. BWM Advisory, LLC is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.

Admin Disclaimer

Contact Admin

Search for Public Sector Retirement Expert.

Receive the Best advice.

PSR Experts can help you determine if Public Sector Retirement is right for you or if you should look for alternatives.

The Best Advice creates
the best results.

Recent Articles

More Articles by Admin

FEGLI Insurance for Federal Employees. Sponsored By: Todd Carmack

Life insurance coverage can help you to better ensure that your loved ones won’t have to struggle financially in case...

TSP millionaire by Bill Eager

Picking Smarter Investments in Your TSP. Sponsored By: Todd Carmack

Picking Smarter Investments in Your TSP:  Todd Carmack If done carefully, it's possible to use the government’s plan for retirement...

Lawmakers Introduce Bill for Federal Employee Pay in 2022. Sponsored by Todd Carmack

A bicameral pair of Democrats recently introduced new bills to increase the pay of federal employees in 2022. Rep. Gerry...

Search For Public Sector Retirement Expert

Receive the Best advice.

PSR Experts can help you determine if
Public Sector Retirement is right for you or if you should
look for alternatives.

The Best Advice creates

the best results.

Subscribe to our Newsletter

"*" indicates required fields

Our Readers Deserve The Best PSHB and USPS Health Benefits Guidance

Licensed insurance agents who understand PSHB, Medicare, and USPS Health Benefits Plan are encouraged to apply for a free listing.

This field is for validation purposes and should be left unchanged.

Book Phone Consultation

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Get In Touch

Stay up to date on the latest information about Public Sector Retirement.

The Best Advice Creates The Best