Key Takeaways
- FEGLI premiums have increased in 2024, making it crucial for federal employees to reassess their life insurance coverage to keep costs manageable.
- Adjusting your FEGLI plan to fit your current financial situation can help maintain affordable protection for your family without overpaying.
Changes to FEGLI in 2024: How to Adjust Your Federal Life Insurance to Keep It Cost-Effective
- Also Read: New TSP Withdrawal Rules and What They Mean for Your Federal Retirement Plans
- Also Read: TSP Investment Moves That Could Help Federal Employees Retire on Their Own Terms
- Also Read: Early Retirement Myths Federal Employees Need to Stop Believing
What Is FEGLI, and Why Should You Care?
The Federal Employees’ Group Life Insurance (FEGLI) program is a large-scale life insurance option for federal employees, retirees, and their families. FEGLI offers basic and optional coverage, providing financial protection in case of death. The basic coverage, which is automatic for most federal employees, equals your annual salary (rounded up) plus $2,000. Employees can also choose additional options to increase their coverage by multiples of their salary, or to cover family members.
Given the scope and flexibility of FEGLI, it is an important resource for federal employees to ensure their loved ones are financially secure. However, as premiums rise in 2024, it’s critical to evaluate whether you’re paying for more insurance than you need or if adjustments can make the plan more cost-effective.
How Has FEGLI Changed in 2024?
In 2024, FEGLI has undergone several changes that federal employees need to consider when reviewing their life insurance coverage.
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Premium Increases for Older Employees
Premiums for FEGLI’s optional coverage have risen, particularly for employees over 50. As life insurance becomes more expensive with age, many federal employees now face higher monthly costs, especially for higher levels of optional coverage. If you are nearing retirement or over 50, the increase in premiums might make it less feasible to maintain the same level of optional coverage. -
Adjustments to Optional Coverage
Optional life insurance under FEGLI, such as Options B and C, has also seen changes in both cost and structure. This optional coverage provides additional insurance for employees and their families, but the rising costs in 2024 may force employees to reconsider how much additional coverage they really need. -
Changes to Basic Coverage
While basic FEGLI coverage remains tied to your salary, any changes in federal salary caps or adjustments to cost-of-living increases could affect the overall payout. It’s important to regularly verify that your basic coverage will still meet your family’s needs in case of an emergency.
How to Keep Your FEGLI Plan Cost-Effective in 2024
With rising premiums, there are several steps you can take to make sure your FEGLI plan remains affordable while still providing sufficient coverage. Below are strategies to consider when adjusting your life insurance:
1. Reassess Your Coverage Levels
As your financial situation changes, it’s important to reassess how much life insurance coverage you actually need. If you have paid off significant debts or if your children are no longer financially dependent, you may no longer need the higher levels of optional coverage you once did. Reducing optional coverage can lower your premiums significantly without compromising your family’s financial security. For instance, reducing your Option B coverage from five multiples of your salary to two can lead to substantial savings.
2. Opt for Basic Coverage
For some federal employees, the basic coverage provided by FEGLI may be enough to meet their life insurance needs. The basic plan is often more affordable because the government covers a portion of the premium. Opting to stick with basic coverage, especially if you’re nearing retirement and already have a strong financial plan in place, can be a good way to keep costs down.
3. Consider Dropping Spousal or Dependent Coverage
If you have optional coverage for your spouse or children under Option C, it may be worth reviewing whether this is still necessary. As dependents grow older or become financially independent, continuing to carry this additional insurance may no longer be the best financial decision. Dropping this coverage can lower your overall premiums and free up funds for other important areas of your financial plan.
4. Compare Private Insurance Options
While FEGLI provides a convenient group life insurance option for federal employees, it’s not your only choice. Depending on your age, health, and financial goals, you may be able to find more cost-effective life insurance through private insurance companies. Private plans often offer fixed premiums, which can be beneficial as you age and FEGLI premiums increase. Comparing the costs and benefits of private policies with your current FEGLI plan can help you find the most affordable option for your situation.
What Are the Costs of FEGLI in 2024?
Understanding the costs of FEGLI in 2024 is crucial to making informed decisions about your coverage. The cost structure remains tied to your salary for basic coverage, but optional coverage premiums are age-based, meaning they increase as you get older. For employees over 50, the cost of optional coverage can rise steeply each year.
To avoid overpaying, it’s essential to monitor how much you’re spending on premiums and compare that to your actual insurance needs. The rising costs in 2024 may mean that it’s time to reduce your optional coverage or switch to a more affordable plan.
How to Choose the Right Coverage for Your Needs in 2024
Choosing the right life insurance coverage under FEGLI involves balancing your current financial obligations with your future goals. Here are some key factors to consider when deciding how much coverage is right for you:
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Dependents: If you still have young children or other dependents, maintaining higher levels of optional life insurance coverage may be necessary to ensure their financial future is secure. However, as your dependents become self-sufficient, it may be time to reduce this coverage.
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Debt Levels: If you still have significant financial obligations such as a mortgage or student loans, life insurance can provide your family with the means to pay off these debts in the event of your death. Once these debts are paid, you may no longer need the same level of coverage.
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Retirement: As you approach retirement, it’s important to reevaluate how much life insurance you need. If you have a well-funded retirement plan, you may no longer need to carry as much coverage, allowing you to reduce your optional life insurance premiums.
Preparing for the 2024 Open Season
The Federal Benefits Open Season is an ideal time to reassess your FEGLI coverage. During this period, you can make adjustments to your life insurance plan, including reducing or increasing coverage levels, adding optional insurance, or reviewing beneficiary designations.
If you haven’t reviewed your FEGLI coverage recently, the 2024 Open Season is a perfect opportunity to ensure your plan still fits your needs and budget. Make sure to evaluate how any changes to premiums or coverage options affect your overall financial plan and whether adjustments need to be made to keep your life insurance cost-effective.
Maintaining Financial Protection in 2024 and Beyond
As FEGLI premiums rise in 2024, it’s important to regularly review your coverage and make adjustments to ensure your life insurance remains affordable. By reassessing your coverage levels, considering basic coverage, and comparing private insurance options, you can continue to provide financial protection for your family without overpaying. With careful planning and proactive management, you can ensure that your life insurance is both cost-effective and sufficient for your needs in 2024 and beyond.
