What is FEGLI?
FEGLI is the Federal Employees Group Life Insurance program. All full-time employees of the federal government are eligible for coverage with no additional underwriting, but there are several drawbacks that you may not be aware which can significantly impact the future of your finances. Instead of finding out when it’s too late, you can take action now to lock in your premiums and insurability for the rest of your life. When comparing rates, keep in mind that:
- FEGLI premiums increase every 5 years
- FEGLI premiums increase when you retire, a double whammy as you reach age 55, 60, 65, 70, 75, and 80
- FEGLI premiums are based on a standard risk class – if you are in good health, you can get a Preferred Plus or Preferred risk classification with lower premiums
- FEGLI coverage is based on your salary – you can only get a maximum of 5 times your base salary through FEGLI. It is generally recommended to have 7-20 times your salary in life insurance, depending on age. The best life insurance companies will offer up to 20-25 times your annual income.
How do FEGLI premiums compare to underwritten term life insurance?
If we assume a 50 year old male with an annual salary of $100,000, taking the maximum $500,000 policy, qualifies for a preferred non-smoker risk class, wants to keep the policy for 30 years, and retires at age 65, the premium outlays would be as follows (based on current rates):
Age 50-54 – $1,820 per year ($70 per pay period)
Age 55-59 – $3,640 per year ($140 per pay period)
Age 60-64 – $7,800 per year ($300 per pay period)
Age 65-69 – $9,360 per year ($780 per month, post-retirement)
Age 70-74 – $15,600 per year ($1,300 per month)
Age 75-79 – $23,400 per year ($1,950 per month)
Total premiums = $308,100
Company ABC – 30-year term
Age 50-79 – $1,945 per year
Total premiums = $58,350
As you can see, the premiums for FEGLI become prohibitively expensive as you get older, while the term life insurance can lock in the premiums on a guaranteed basis for the period of time that you choose (e.g. 10, 15, 20, 30 years, or guaranteed for life).
How can I find out how much my FEGLI premiums will cost in the future?
You can visit the Office of Personal Management (OPM) website to use their FEGLI premium calculator based on your own salary. Option A is the standard coverage (salary rounded to next thousand, plus $2,000 additional), and Option B is the coverage for multiples of your salary.
How can I get a life insurance quote to compare to my FEGLI premiums?
Just click the banner at the top or bottom of the page to get your instant quote. You can also give us a call at 1-800-571-2980 from 9 AM to 9 PM Eastern Standard Time or e-mail us at Info@terminsurancebrokers.com 24 hours a day.