September, 23 2017

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FEGLI Life Insurance Review

FEGLI Life Insurance Review

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(FEGLI) Federal Employees’ Group Life Insurance Review

Pros:  No medical exam or health questions- FEGLI is very convenient since there isn’t any medical underwriting.  This makes it a perfect option for those who are uninsurable on the open market.  Also, the convenience of having premiums drawn directly from the paycheck is another convenience many prefer.  Free coverage after age 65- If the insured keeps the Basic coverage into retirement they are eligible for the 75% reduction option.  Coverage will gradually reduce down to 25% of the original basic benefit and will last the rest of the insured’s life free of charge (no cost after the age of 65).  This is a great way to cover final expenses for no cost.  For postal employees- the U.S. Postal Service pays the entire cost of the Basic life insurance.

Cons:  The prices for Option B and C are expensive compared to the prices available on the open market.  In addition, the rates for FEGLI increase every 5 years.  The majority of the insured’s on the FEGLI plan really notice the increase in premiums stating at age 50.  This is when many will start to shop around for a private policy since the savings is substantial.  (See rate chart below)

Bottom Line:  FEGLI is unique in that it receives a five star rating in some areas and a two star rating in others.  For those who are uninsurable with a private company than FEGLI is a godsend. Also, if the insured keeps the basic coverage into retirement, they will have free coverage (25% face value) for life starting at the age of 65.  This is a great way to cover final expenses.  However, for those that are healthy, securing a policy outside of FEGLI in lieu of option B or C will likely be a much better option.  This becomes very evident at the age of 50 when the premiums jump up and again will again at age 55, 60 and 65, 70, 75 and 80+. 

About

Type: Largest public group life program in the world

Issued by: (MetLife) Metropolitan Life Insurance Company

Founded: 1954

Website: www.opm.gov

Phone: (202) 606-1800

Address: U.S. Office of Personnel Management1900 E Street, NW Washington, DC 20415

A.M Best Rating: A+ (Superior) Second highest of 16 possible ratings

Comdex Ranking: 95 out of 100

Competitors: WAEPA, New York Life, Northwestern Mutual, Mass Mutual, Mutual of Omaha, John Hancock, PennMutual, Principal, State Farm, Allstate, Ohio National Life, American General Life, Banner Life, Protective Life, Primerica, State Farm, USAA, Genworth Life, Pacific Life Insurance, North American Co, Lincoln National Life, ING-ReliaStar, Transamerica, Prudential.

 

Price Comparison Chart

Sample rates for a male with a $75,000 annual salary paid bi-weekly, postal employee, with the FEGLI multiplier 3x ($302,000) coverage B option compared to Banner Life $300,000 20 year policy at the preferred plus rate class locked in at age 45.

AgeFEGLIBanner Life
45-49$36.00 mo$37.01 mo
50-54$58.50 mo$37.01 mo
55-59$103.50 mo$37.01 mo
60-64$234.00 mo$37.01 mo

 

Receive FEGLI rates by using the FEGLI Calculator

 

 

Summary
Review Date
Reviewed Item
FEGLI Life Insurance
Author Rating
4