Things to Consider About Life and Long-Term Care Insurance (FEGLI and FLTCIP)
One of the most frequently ignored aspects of retirement plans is insurance planning, which includes life, long-term care, health, and liability insurance. This is mainly because traditional wealth management has primarily focused on providing investment advice and hasn’t given any additional value to the plethora of other financial planning categories. The absence of wise counsel in these other areas results in retirement plan gaps that put a family’s financial independence in grave danger.
Here are some retirement planning ideas that federal employees can leverage to decide what actions will best serve the requirements of their families.
1. Buy Insurance
Because of their connection to the insurance carrier, many insurance product experts, like insurance brokers, could have a conflict of interest while advising federal employees. Most get incentives to promote a specific insurance package and, as such, push most of these federal employees to purchase things that aren’t in their best interests.
The Federal Employee Group Life Insurance program, or FEGLI, is one of the many FERS benefits available to federal employees. You can get group life insurance while you’re employed, and you might be able to keep using it when you retire under specific circumstances.
Young federal employees are urged to get life insurance via FEGLI if needed, especially if they have a family or would leave someone else to care for if they passed away.
Getting life insurance
The most common life insurance application is to replace lost income while working. FEGLI is the most affordable option for meeting this demand while employed. Following that, term insurance offers the best instant price.
It’s crucial to remember the various schools of thought regarding the appropriate amount of life insurance. What will you want to have done to support your family after you pass away?
Another way to look at it is to ensure that the objectives you currently have are still attainable for those you leave behind. Your FERS pension is secure as a qualified federal employee up until the time of your passing. Your surviving spouse could receive up to 50% of your FERS annuity if you chose the survivorship benefit. Over time, that loss can become substantial, along with reducing one of your Social Security benefits, mainly if one spouse passes away sooner than the other.
Consider Long-Term Care Insurance:
One of the most vital things to remember is that neither the FEHB nor Medicare will pay for lengthy long-term care requirements. A Medicare component covers the initial few months, but any expenditures incurred beyond that are your own.
Long-term care events often last two to three years. At this point, you may need to live in an assisted living or skilled nursing facility, or you may need assistance from caregivers who visit your home. The duration of long-term care events has occasionally increased to five or six years due to advancements in medical care.
The Premium Stabilization Feature of FLTCIP is one tremendous advantage (PSF). Long-term care insurance costs typically increase dramatically over time, but not when they are included in specific insurance policies. The PSF for FLTCIP is determined by taking a percentage of the premiums paid for the FLTCIP 3.0 group policy.
The PSF amount may reduce your future premiums or result in a premium death benefit reimbursement.
You are eligible for this if you haven’t opted out, are 85 years old or older, and have been participating in FLTCIP 3.0 for at least ten years. Additionally, your PSF must be large enough to cover 50% of your monthly premiums for the upcoming year or more. The premium refund death benefit is calculated based on your current coverage at the time of your death. The remainder would go to your beneficiary.
Investments and insurance together
Insurance companies offer annuity products. While we don’t oppose annuities, we dislike people who attempt to use an insurance product to address numerous problems. Annuities shouldn’t be used to cover long-term care costs or life insurance. Work backward from the issue at hand to determine whether an insurance policy can address it.
A fundamental concept of portfolio management is the idea that risk and return go hand in hand. A portfolio has numerous risks, each of which is handled differently. The “limit” on growth in these annuity schemes typically supports the downside risk. Therefore, even though it could seem like a terrific program, you might be missing out on the growth of 4 percent, 5 percent, or occasionally even 6 percent or more.
Contact Information:
Email: [email protected]
Phone: 7242723902
Bio:
Craig E. Vukich is a 35 year retirement specialist and Financial Advisor who has helped thousands of clients all over the country with their investment portfolios and retirement strategies.
In that time, Craig has also helped seniors and retirees with their Medicare options as healthcare continues to be one of the most confusing issues facing people today.
Personally, Craig lives in Beaver Falls, Pa with his beautiful wife and childhood sweetheart Barb and their lovely daughter Shalyn.
Craig is a graduate of Westminster College which is about an hour north of Pittsburgh. Craig is a recreational golfer and traveler and Pittsburgh sports fanatic.
Disclosure:
This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.
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