Need Money? Rethink Life Insurance

The first in a series on making the most of your government benefits.

If you are interested in comparing prices on private term insurance, here are some places to look:

Could you use a little extra money? Who couldn’t? This week and the following two weeks, I’ve decided to provide some tips on how you can get a few more  bucks to spend -- or better yet, to put away for your retirement. It’s all about making the most of your government benefits.

Let’s start with life insurance coverage.

The Federal Employees Group Life Insurance program is not necessarily the best deal in town for buying term life insurance. Some federal employees can qualify for insurance at lower rates than FEGLI offers. Also, life insurance needs change over time -- children grow up and become independent, mortgages are paid down and retirement benefits build up. All of these may be good reasons to consider reducing your life insurance coverage.

Federal employees are automatically enrolled in FEGLI basic life insurance when they are first hired. Most feds also can add Option A (an additional $10,000 in coverage), Option B (based on multiples of your basic pay, up to five times your annual rate), and Option C (coverage for your spouse and dependent children).

Option B is the one to be careful about. It costs $.08 per $1,000 of coverage biweekly for an employee between the ages of 45-49. So an employee carrying $300,000 of coverage would pay $24 biweekly, or $52 a month. A 20-year level-term insurance policy worth $300,000 sold in the private sector can cost as little as $20-$30 per month for a preferred candidate ages 45-49. What’s more, when you purchase a level-term policy, in 20 years that policy will have the same premium. But under FEGLI, it will cost $403 monthly to maintain this same level of coverage for those ages 65-69.

The rate for a private insurance policy will be based on other factors besides your age: Women tend to get lower rates than men, nonsmokers less than smokers, and of course, pre-existing medical conditions also factor into the premium. Before you cancel your FEGLI coverage to buy a private policy, make sure the policy you are considering actually will cost the price you were quoted after the insurance company does its underwriting -- the process of evaluating your insurability to determine the financial risk the insurance company is taking. If you don’t pass the underwriting, then you may have to pay much higher rates -- or not be covered at all.

To make a good cost comparison, check your leave and earnings statement to see how much is being deducted from your biweekly salary (or your monthly annuity payment if you are retired) for FEGLI coverage. The Office of Personnel Management, which administers the FEGLI program, has a frequently asked questions section on its website to help you determine how much coverage you have based on your premiums or the insurance code that appears on your pay statement.

FEGLI Features

Before you decide to cancel FEGLI in lieu of a private insurance policy, it’s important to remember the following about FEGLI:

  • When you have a life event (marriage, death, divorce, birth or adoption of a child), you are eligible to enroll in FEGLI or increase your coverage, regardless of your overall health or pre-existing medical conditions.
  • You can cancel or reduce your coverage at any time as long as you have not “assigned” your coverage.
  • As your salary increases, the amount of your coverage increases, since Basic FEGLI and Option B are based on your basic pay rate.
  • As you grow older, Optional FEGLI coverage premiums increase. Every five years, the price of optional FEGLI will go up, with little warning other than less money in your paycheck.
  • FEGLI pays your beneficiary, regardless of the cause of your death -- unless your beneficiary intentionally caused your death.
  • You can continue FEGLI coverage in retirement and the value is based on the coverage in effect for the five years before your retirement.
  • When you are retired and older than 65, you can continue to pay premiums to maintain your FEGLI coverage, or you can allow the coverage to scale back automatically. Basic and Option A coverage will reduce by 75 percent, but you won’t have to pay any additional premiums. Option B and Option C will reduce to nothing if you choose a “full reduction” after retirement. 
Private Plans


X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.