Legal Law

Life insurance for federal employees: pros and cons of FEGLI

Many federal employees in the US assume that federal employee group life insurance (FEGLI) is the best plan available to them because they automatically enroll in the basic plan as soon as they sign up. Many even choose to add one of three additional coverage options (Options A, B, or C). But how do federal employees really know that they are getting the most affordable plan and the best coverage available? Have you fully weighed the pros and cons of the plans? Are you aware of the alternatives?

To help federal employees better understand the costs and benefits of FEGLI, we have compiled a list of the pros and cons of FEGLI. We hope this list helps federal employees decide if FEGLI is the best plan for their family.

Advantages of FEGLI

  • Convenience – You’re automatically enrolled in basic coverage, regardless of your age or health. You don’t have to take any medical exams and are guaranteed coverage as long as you are a government employee and pay your premiums. Premiums are also automatically deducted from your paycheck, so you don’t have to worry about making payments.
  • Possibility to choose the amount of coverage – The basic plan covers your salary rounded to the nearest thousand plus $ 2,000, but you can choose to add more coverage. Option A adds $ 10,000 to your coverage and Option B allows you to choose even more.
  • Family coverage – Option C allows you to cover your spouse and children in addition to yourself. Some other plans required that you have separate policies for each person.

Cons of FEGLI

  • Cost – Additional coverage options A, B and C are an additional cost to the basic plan and these premiums increase as you age. Your spouse and children’s coverage premiums are based on your age, not the age of your family members, so these costs also increase as you get older. You will also have to pay an additional premium if you want to add accidental death and dismemberment insurance.
  • Coverage can be temporary: You will only be eligible while you work for the federal government or if you retire from government office. If you decide to quit your job or are fired, you lose your FELGI coverage.
  • Lack of options – Although FEGLI offers some options, it does not offer options such as Whole Life Insurance, Single Premium Whole Life Insurance, or Universal Life Insurance. These policies offer features and benefits that are not included in the FEGLI plans.
  • Difficult to increase coverage – You can decrease the amount of your coverage at any time, but it can only be increased during open enrollment periods, through a physical exam, or with a “Qualifying Life Event.” The last open enrollment was almost 10 years ago in September 2004, so it is inadvisable to wait for these open seasons to increase your coverage.

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