Will FEGLI Meet Your Needs During Retirement? Probably Not.

Many federal employees take advantage of their Federal Employees' Group Life Insurance (FEGLI) while they're still working, but trying taking those benefits into retirement can cause some trouble. It's important for you to consider your future life insurance needs before you reach retirement, because by then it may be too late.

If you need life insurance during retirement and plan to keep your FEGLI coverage, here are just a few of the problems you may encounter:

1. You must be enrolled in FEGLI for at least five years before you retire in order to keep your benefits. If you retire without FEGLI coverage, it can be difficult to qualify for a policy.
2. The price of FEGLI increases as you age, and during retirement it can be difficult to make those high payments. By age 65, your monthly FEGLI payments could be $400 or more for $250,000 worth of coverage! That's almost $5,000 a year and the rate will only continue to increase over time.
3. FEGLI doesn't build cash value, so if you lose your benefits you walk away empty handed.
4. If your children are independent adults, they may not benefit from your FEGLI policy if something happens to you. Only your spouse will benefit and he or she will have to use the funds for everyday expenses in addition to your funeral and any estate taxes. Your benefits may not be enough.

But most of these problems occur at retirement, so why should you worry now?

If you should lose your FEGLI benefits at retirement, it may be too late to get another policy. Insurance companies give lower rates to young, healthy people and higher rates (or even letters of denial) to older people who have developed health issues or are more prone to health issues.

If you seek life insurance outside of the government, from a private carrier now, you're much more likely to save money on your policy and keep the policy for 10, 20, 30 years or even for the rest of your life. And with lower rates that NEVER increase, you won't have to worry about the cost of your insurance during retirement.

Private insurance companies also offer plans that build cash value, so you can use the cash during retirement if you need it. You'll get to choose your beneficiaries, so you'll know exactly where the money will go when you pass away.

If you'd like to talk with a consultant to see if your FEGLI benefits will live up to your needs, give us a call or fill out the form on this page. We can help you evaluate your current plan and needs and determine what you might need at retirement. We'll also see if we can find a better plan to suit your needs and your budget.

Want to learn more about the differences between FEGLI and other life insurance plans? Check out this page!

Check out some of our other blogs

• 14,000 Make Thrift Savings Plan Hardship Withdrawals

• FEGLI Option C is Not Best Option for Children's Coverage

• You Could Access Your Retirement Savings Sooner Than You Thought