The cost of your Federal Employee Group Life Insurance and the amount of coverage you receive from it are difficult to understand unless you know how it’s calculated.
Trying to figure out how much coverage you’ll retain after retirement (or reaching age 65, whichever comes later) takes even more configurations. And even if you do find out how much you’ll have, what do you do if you decide that it costs too much for too little coverage?
FEGLI calculations require all sorts of variables including your current age, your expected retirement age, your base salary, and much more.
Fortunately, we live in an age where you can access free FEGLI calculators to determine your current benefits– and to nail down how much you could save by supplementing your plan with United Benefits!
USE AN ONLINE FEGLI CALCULATOR
Thanks to the efforts of people who understand how FEGLI works, you can quickly and easily enter factors like your age, salary, and current FEGLI arrangements into an online calculator to see exactly how much we could help you. The calculator can determine your potential savings over time if you supplemented your current, fluctuating FEGLI with a locked-price plan from United Benefits; From there you can start a conversation with a representative who can help answer questions like:
- How much coverage do I have on my current FEGLI plan?
- What’s the bi-weekly and annual cost of my current coverage?
- How much post-retirement coverage will I have?
- How much, if any, will I be paying post-retirement for my FEGLI?
- What will the total cost of my FEGLI be during my lifetime?
- Can I get a FEGLI plan that will cover my entire family?
- How much money would I save if I tried a plan with United Benefits?
- And so much more!
Not all FEGLI plans may be right for you.. Calculators like this one as well as talking with an agent who understands FEGLI are both valuable tools to determine which additional United Benefits plans are best-suited for your lifestyle.
IMPORTANT FEGLI TERMINOLOGY
• “BIA,” or “Basic Insurance Amount”
Your BIA is a major component that determines your minimum FEGLI cost and coverage. To figure out your BIA, take your current salary and round it up to the nearest $1,000, then add $2,000 to it. This is your Basic Insurance Amount.
FEGLI costs 15¢ per $1,000 of your BIA.
So if, for example, you have a $84,500 salary, then you have coverage for $87,000. If you’re paid bi-weekly, then your coverage costs $13.05 every two weeks.
It should be noted that if you’re under 45, you receive additional coverage at no additional cost.
• FEGLI Elections
All government employees are enrolled in a FEGLI plan of some kind, unless they’ve waived or canceled it. There are four plans, or “elections,” available to federal workers.
FEGLI “Basic” is the minimum arrangement available. You can calculate the amount of your coverage with Basic using your salary and age to determine your BIA. If you want additional coverage then the next cheapest choice, Option A, provides you with an extra $10,000 in coverage for yourself alone.
Option B is essentially term insurance, which is renewed every five years. You can be insured for as much as five times your annual salary (rounded up) to help cover a mortgage or a growing family. Option C allows you to insure your spouse and children (up to a certain age).
Each FEGLI option will change drastically as you approach retirement age, so you need to know how to select a reduction plan to keep as much life insurance as you think you’ll need.
• Reduction Plans
Once you retire or turn 65 (whichever comes later), your life insurance cost and coverage will drop dramatically by default, unless you choose otherwise.
Different reduction plans allow you to choose by how much your life insurance decreases after retirement. If you divert from the automatic option, your selected plan will require you to continue paying at an increased cost for your coverage.
The default reduction plan for all federal workers is also known as the Free Reduction Plan, or 75% reduction plan. You no longer have to pay for your FEGLI, but your coverage will decrease by default down to one quarter of its original amount (your BIA).
The other two plans available are the 50% Reduction, which allows you to keep half your coverage, and the No Reduction plan, which lets you keep all of it. However, if you select either plan you’ll have to continue paying for those portions of your life insurance through retirement…and those portions will be more expensive than they were during your working years.
Post-retirement costs for life insurance can increase dramatically compared to what you pay for coverage during your working years. It’s important to understand your reduction plan to make sure you have preparations in place to match the lifestyle you want.
Do you know which FEGLI plans are best for you…or are none of them quite enough?
United Benefits has assisted thousands of federal employees on several impactful topics. We can help you, too. Ask us anything!
Click here to request a consultation and talk one-on-one with a representative about the options available to you.
