A surprising number of Americans do not carry life insurance. In fact, 46% of citizens are not covered. An even greater number of people do not have adequate coverage.
This means that your spouse and dependents could suffer in the event of an unexpected passing. They may not have enough money to settle their debt or pay the monthly bills.
How do you know if you have a quality insurance plan? We are here to help. Today, we review the Federal Employees’ Group Life Insurance (FEGLI) plan.
Read on for all the facts about the FEGLI plan. Explore topics such as detailing what a group term life insurance plan is.
What Is FEGLI?
The federal government is the largest employer in the country. There are more than 9 million federal employees. This figure does not even consider the millions of federal retirees out there.
While federal employees may choose a Gerber or Globe Life Insurance plan, the vast majority elect to carry FEGLI. The byproduct is that FEGLI is the largest insurance plan in the world. There are more than 4 million FEGLI members in the existing and retired federal workforce.
The cost of FEGLI is shared between employees and the federal government. The monthly premiums are paid out of recurring payroll deductions.
What Is Group Term Life Insurance?
A term plan provides a guaranteed benefit to the covered person and his or her beneficiaries. This benefit is issued by the insurance company so long as the death occurs during the plan’s specified term.
There is an expiration date on a term plan. At this point, the carrier has to decide whether to renew coverage or allow it to expire. Some carriers elect to convert their term life plan to permanent coverage.
How Does FEGLI Work?
FEGLI has basic coverage and three different options for members to choose from. You need to carry basic coverage in order to qualify for optional insurance. Every federal employee is automatically enrolled in basic coverage unless they waive it.
The basic coverage is the greater of two different numbers. The first rate of coverage is a flat $10,000. The second coverage rate is your salary rounded up to the nearest $1,000.
Optional coverage is paid for by the employee. Option A provides employees with a $10,000 life benefit.
Option B is where you can really increase the financial amount of your policy. Here, you can acquire coverage by up to five times your annual salary.
FEGLI offers option C for your spouse and dependent children. The base amount is $2,500 per child and $5,000 per spouse. The coverage amount is then multipliable up to five times.
FEGLI does not provide retirement income. If you are interested in supplemental income, a private plan is necessary.
Is FEGLI Good Life Insurance?
FEGLI is a decent option for younger federal employees. When you turn 45, additional coverage starts to come at a higher price tag.
The good news about FEGLI is that you are automatically enrolled even with a pre-existing condition. However, you may find out that private insurance plans are cheaper as you get older. Healthy individuals may turn to a private plan as they pass 45 years old.
If you have FEGLI and are considering private life insurance, contact us today to speak with a specialist.