Life Insurance For Feds – FEGLI’s Pros and Cons

Many federal employees in the U.S. believe that Federal Employee Group Life Insurance (FEGLI) is the best plan because they’re automatically enrolled in the basic plan as soon as they start working. Many purchase one of the three extra coverage choices (Options A, B, or C). But how can federal employees be sure they’re receiving the cheapest plan with the best coverage? Have they carefully considered the plans’ advantages and disadvantages? Are they aware of other options?

Here’s a list of FEGLI’s advantages and drawbacks to help federal employees better understand its costs and benefits. We believe that this list will assist federal employees in determining if FEGLI is the right plan for their families.

FEGLI’s Advantages

Convenience – You’ll be automatically enrolled in basic coverage, regardless of age or health. No medical tests are required, and you’re guaranteed coverage as long as you’re employed by the government and pay the premiums. The premiums are also deducted from your paycheck automatically, so you don’t have to worry about that.

Ability to select coverage amount – The basic plan covers your salary rounded up to the closest thousand plus $2,000, but you may add extra coverage if you like. Option A increases coverage by $10,000, while Option B lets you choose even more.

Family coverage – Option C provides coverage for your spouse and children, in addition to yourself. Other plans require you to have separate insurance for each individual.

FEGLI’s Disadvantages

Cost – The greater coverage comes at a price. Options A, B, and C are an extra cost to the basic plan, and their premiums rise as you age. The premiums for your spouse and children’s coverage depend on your age, not the age of your family members; so, these expenses rise as you age. You’ll have to pay an additional premium if you want to add Accidental Death and Dismemberment Insurance.

Coverage might be temporary – You may only be eligible for coverage if you work for the federal government or retire from a government post. If you leave your job or are fired, you lose your FEGLI coverage.

A lack of alternatives – Although FEGLI provides a few options, it doesn’t offer Whole Life Insurance, Single Premium Whole Life Insurance, or Universal Life Insurance. These policies include features and advantages not found in FEGLI’s plans.

Difficult to raise coverage – You can reduce your coverage at any time but only increase it during open enrollment periods by passing a physical exam or by experiencing a “Qualifying Life Event.” The last open enrollment period was more than ten years ago, in September 2004; thus, waiting for these open seasons to extend your coverage is imprudent.

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