As a federal employee, you have the option of getting life insurance through the Federal Employees Group Life Insurance (FEGLI) program. FEGLI is a group term insurance that has a basic benefit and three add-on options. It can be a great tool, but costs may spiral out of control as you get older. The basic benefit cost doesn’t increase as you age, but the options’ costs increase every five years – and dramatically so. Before we enter into the next FEGLI Open Season, let’s review the various cost structures.
FEGLI costs while employed
In this example, we assume you are between ages 50-54, have a salary of $97,752, and have FEGLI Basic and Option Bx5. Your Basic would cost you around $15 per pay period. FEGLI Option B will cost you $53.90 per pay period, meaning your total cost for FEGLI coverage is $68.90.
FEGLI cost increase age 55
Because of the way the FEGLI cost structure is set up, every 5 years your FEGLI Option premium increases. As illustrated in the chart below, at age 55, the cost of FEGLI Basic remains the same (assuming your salary does not increase or decrease). However, the Option B cost increases to $98.00. Happy birthday! This gives you a total FEGLI cost of $113.00. That’s a 64% increase in cost for FEGLI Basic and Option B coverage.
FEGLI cost increase age 60
Five more years roll around, and you turn age 60. You continue to pay $15.00 per pay period for your Basic (assuming your salary stays the same). You will see that the Option’s cost jumps to $215.60 per pay period. At age 60, your total cost per pay period for FEGLI Basic and Option B is $230.60. That’s an increase of 104% from age 55 to age 60 in premiums.
The next FEGLI Open Season
FEGLI Open Season happens every once in a blue moon. The last open season was in September 2016. Before that, there wasn’t an open season for 12 years. No one knows when the next Open Season will roll around, but you may get a chance before you enter federal retirement.
Before opting into FEGLI during an Open Season make sure you understand the way the prices increase somewhat dramatically as you age. Don’t delay evaluating your situation and weighing your options. Pull out your pay stubs and receipts and see what you’re paying for life insurance and FEGLI benefits. Do you know all of your current and future options? Do you understand the costs and benefits of your plan? If not, it’s time to study up and consult a professional.
Consider your options
Explore how much FEGLI you have and see if you can find a better rate elsewhere. You may consider shopping in the private sector for cheaper rates. If you choose to do this, we caution you to carefully evaluate when and even if you drop your FEGLI.
