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What Factors Can Alter the Rate of FEGLI?

Jan 21st 2014 at 5:11 AM

Are you worried that your increasing FEGLI rates will take a toll on your postal or federal retirement benefits? Keep reading to find out what factors are associated with your increasing FEGLI rates and what drawbacks exist for group term life insurance programs and how you can protect yourself.


FEGLI or Federal Employees Group life Insurance is the biggest group term insurance program in the world. All federal employees are eligible for this guaranteed federal employees retirement system, which comes with various coverage plans and benefits.


Although there are multiple advantages of getting this type of insurance, several factors may affect your overall FEGLI rates and costs. The challenges that Federal and Postal employees face with regard to FEGLI are more obvious for individuals older than the age of 50 but no less impactful on nearly every participant in the Federal Employees Retirement System (fers) and the Civil Service Retirement System (csrs).


Whether or not, you are aware of these cost increases and how drastic the FEGLI rates increase over time, the following points will help you make the right choice and help you find a FEGLI calculator that can help you make the best decisions possible.  Take a look:
Factors that Can Alter FEGLI Rates


Before you decide whether or not to cancel the life insurance, go through these factors that can alter the rate of FEGLI considerably. Take a look:


Time


Once you reach age 35, your FEGLI premium is going to increase every five years.  Most federal and postal employees over the age of 45, can almost certainly find life insurance policy that is significantly cheaper than FEGLI and after the age of 50 it is highly recommended to consider protecting your family by locking in your insurance costs and avoiding the FEGLI rate increases in the years to come.


Post-65 Reductions in the Amount of Insurance


If you have reached 65 years old and have retired you will be required to select a reduction of your FEGLI coverage of 75 Percent Reduction, 50 Percent Reduction, and No Reduction.  Your FEGLI coverage is not impacted when you reach 65 if you are still an employee at that time.  This reduction is phased in based on the details of your selection and if you choose No Reduction your costs will continue to rise based on your age band and applicable FEGLI rates.


Health


FEGLI is a group term life insurance, which means it holds a drawback for those who are healthy yet are grouped with people facing medical issues.  The costs for insurance are typically based on an individual’s health and therefore insurance premiums are higher for those with health problems.  As healthy individuals are grouped together with these participants who are not as healthy, FEGLI rates for healthy individuals will almost certainly be higher than if these same individuals bought private insurance outside of the FEGLI program.  This increase in cost is especially pronounced once a person reaches 50 years old.


Limited Premium


The most affordable and cost effective choice when it comes to this federal employees retirement system is the basic insurance coverage – which is limited to just $2000 over your basic annual pay rounded up to the nearest thousand. If your requirements are more than that and you have greater number of dependents, you will want to consider Option B and sometimes Option C of the FEGLI coverage – and the costs of these additional insurance plans will be added to your premium and increase the overall FEGLI rates.


The bottom line is this – If you are healthy, and are considering maintaining your insurance coverage beyond the age of 50, it is best to compare your life insurance plans beforehand and get help from an experienced life insurance agent.


To use a FEGLI calculator and for more information about your FEGLI rates and also to learn how you can potentially save thousands of dollars a year by using private insurance, please visit http://www.comparefegli.com

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