Federal Employees Group Life Insurance Basic Policy After Retirement

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Topic Author
Tdubs
Posts: 889
Joined: Tue Apr 24, 2018 7:50 pm

Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Tdubs » Wed Sep 04, 2019 12:06 pm

Has anyone opted to keep 100% of their FEGLI basic policy into retirement? I'm still about 6 years from retirement, and I've been thinking about ways to cover the income reduction my wife would take if I predecease her--from a 50% reduction in pension (a small one since I entered federal service late in life) and social security.

If I understand it correctly, FEGLI basic might be a decent option to help cover the gap. I won't retire until my late 60s. So any life insurance policy would not likely run more than 20-25 years.

The FEGLI basic policy provides 1 year annual salary plus $2,000. For me, that is $179,000 right now. In retirement, I'd get 25% for free. If I want to keep the 100%, I have to pay $2.13 per $1,000 above the 25%. For me that would be $381.27 per month or $4,575.24/year to get an additional $134,250. As far as I can tell, the cost of the premium and the payout stay locked in for life. It would take me about 30 years (my late 90s) to lose the bet and pay more than the $134k.

Can't say I like the idea of spending $4,575 every year on life insurance, but if my primary goal is to provide an inheritance for my wife or children, is this a good deal?

Spiff
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Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Spiff » Wed Sep 04, 2019 12:17 pm

I did not keep FEGLI after I retired because it's the most over priced insurance on the planet. If you're in reasonable health, you should be able to get a term policy to cover the gap. The only way I would consider the FEGLI policy is if you wouldn't be able to obtain insurance from any other provider due to health issues.

rich126
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Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by rich126 » Wed Sep 04, 2019 12:22 pm

Have you tried getting an estimate for a 10 or 20 yr fixed term life insurance policy at your current age just to compare the numbers?

Usually FEGLI is a bad idea for healthy/younger folks although it might be good as you get older. Many years ago I compared the prices and got a 20 yr fixed policy at age 36 and that just recently expired. I wasn't willing to keep it at the higher rate since I have no kids or a spouse. I originally got it thinking it would be nice to be locked in at that rate ($160 a year for 200K?) in case something in my life changed.

Also how much income are you wanting to replace ?

Topic Author
Tdubs
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Joined: Tue Apr 24, 2018 7:50 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Tdubs » Wed Sep 04, 2019 12:29 pm

rich126 wrote:
Wed Sep 04, 2019 12:22 pm
Have you tried getting an estimate for a 10 or 20 yr fixed term life insurance policy at your current age just to compare the numbers?

Usually FEGLI is a bad idea for healthy/younger folks although it might be good as you get older. Many years ago I compared the prices and got a 20 yr fixed policy at age 36 and that just recently expired. I wasn't willing to keep it at the higher rate since I have no kids or a spouse. I originally got it thinking it would be nice to be locked in at that rate ($160 a year for 200K?) in case something in my life changed.

Also how much income are you wanting to replace ?
The hard to compare aspect of the FEGLI basic policy to a fixed term policy is that there is an absolute guarantee payout when I die and, I think, no increase in the premium throughout retirement.

This policy would provide my wife with an extra 4-5 years of income compared to lost income from SS and pension. So depending on my age of death, it might be enough, maybe not.

delamer
Posts: 9479
Joined: Tue Feb 08, 2011 6:13 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by delamer » Wed Sep 04, 2019 1:54 pm

Tdubs wrote:
Wed Sep 04, 2019 12:29 pm
rich126 wrote:
Wed Sep 04, 2019 12:22 pm
Have you tried getting an estimate for a 10 or 20 yr fixed term life insurance policy at your current age just to compare the numbers?

Usually FEGLI is a bad idea for healthy/younger folks although it might be good as you get older. Many years ago I compared the prices and got a 20 yr fixed policy at age 36 and that just recently expired. I wasn't willing to keep it at the higher rate since I have no kids or a spouse. I originally got it thinking it would be nice to be locked in at that rate ($160 a year for 200K?) in case something in my life changed.

Also how much income are you wanting to replace ?
The hard to compare aspect of the FEGLI basic policy to a fixed term policy is that there is an absolute guarantee payout when I die and, I think, no increase in the premium throughout retirement.

This policy would provide my wife with an extra 4-5 years of income compared to lost income from SS and pension. So depending on my age of death, it might be enough, maybe not.
Your last statement is a little concerning.

Presumably, you mean if you died much sooner into retirement than expected then the insurance payout wouldn’t be enough?

Bronko
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Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Bronko » Wed Sep 04, 2019 2:22 pm

FEGLI is over priced. I keep only the lowest amount offered. WAEPA is absolutely the best option for federal employees. Plus every year I've gotten a significant rebate check. Check it out and save some money.
Never let a little bit of money get in the way of a real good time.

Topic Author
Tdubs
Posts: 889
Joined: Tue Apr 24, 2018 7:50 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Tdubs » Wed Sep 04, 2019 2:30 pm

delamer wrote:
Wed Sep 04, 2019 1:54 pm
Tdubs wrote:
Wed Sep 04, 2019 12:29 pm
rich126 wrote:
Wed Sep 04, 2019 12:22 pm
Have you tried getting an estimate for a 10 or 20 yr fixed term life insurance policy at your current age just to compare the numbers?

Usually FEGLI is a bad idea for healthy/younger folks although it might be good as you get older. Many years ago I compared the prices and got a 20 yr fixed policy at age 36 and that just recently expired. I wasn't willing to keep it at the higher rate since I have no kids or a spouse. I originally got it thinking it would be nice to be locked in at that rate ($160 a year for 200K?) in case something in my life changed.

Also how much income are you wanting to replace ?
The hard to compare aspect of the FEGLI basic policy to a fixed term policy is that there is an absolute guarantee payout when I die and, I think, no increase in the premium throughout retirement.

This policy would provide my wife with an extra 4-5 years of income compared to lost income from SS and pension. So depending on my age of death, it might be enough, maybe not.
Your last statement is a little concerning.

Presumably, you mean if you died much sooner into retirement than expected then the insurance payout wouldn’t be enough?
Yes, this would only be a partial solution early in retirement.

Topic Author
Tdubs
Posts: 889
Joined: Tue Apr 24, 2018 7:50 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Tdubs » Wed Sep 04, 2019 2:36 pm

Bronko wrote:
Wed Sep 04, 2019 2:22 pm
FEGLI is over priced. I keep only the lowest amount offered. WAEPA is absolutely the best option for federal employees. Plus every year I've gotten a significant rebate check. Check it out and save some money.
I have a policy with WAEPA, but that isn't a solution for my retirement question as the policy gets massively expensive in retirement, reduces in value, and terminates, I think, at about 84 years.

By comparison, the basic policy of FEGLI never ends. You always get a payout, even at 105.

BruDude
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Location: Las Vegas

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by BruDude » Wed Sep 04, 2019 3:36 pm

Shop for your own coverage. Let's assume you are 60 years old today just as an example. $150k guaranteed for life would cost you about $265/month at a Standard health rating and about $215/month at a Preferred health rating. More coverage, less money, no brainer. FEGLI continuation is only a good idea if you can't qualify for anything else, are a smoker, or have health issues that push you into a substandard health rating category.

delamer
Posts: 9479
Joined: Tue Feb 08, 2011 6:13 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by delamer » Wed Sep 04, 2019 3:38 pm

Tdubs wrote:
Wed Sep 04, 2019 2:30 pm
delamer wrote:
Wed Sep 04, 2019 1:54 pm
Tdubs wrote:
Wed Sep 04, 2019 12:29 pm
rich126 wrote:
Wed Sep 04, 2019 12:22 pm
Have you tried getting an estimate for a 10 or 20 yr fixed term life insurance policy at your current age just to compare the numbers?

Usually FEGLI is a bad idea for healthy/younger folks although it might be good as you get older. Many years ago I compared the prices and got a 20 yr fixed policy at age 36 and that just recently expired. I wasn't willing to keep it at the higher rate since I have no kids or a spouse. I originally got it thinking it would be nice to be locked in at that rate ($160 a year for 200K?) in case something in my life changed.

Also how much income are you wanting to replace ?
The hard to compare aspect of the FEGLI basic policy to a fixed term policy is that there is an absolute guarantee payout when I die and, I think, no increase in the premium throughout retirement.

This policy would provide my wife with an extra 4-5 years of income compared to lost income from SS and pension. So depending on my age of death, it might be enough, maybe not.
Your last statement is a little concerning.

Presumably, you mean if you died much sooner into retirement than expected then the insurance payout wouldn’t be enough?
Yes, this would only be a partial solution early in retirement.
If that is the case, it seems that you really need to look for a longer term solution. Increasing savings should be an option given that you are 6 years from retirement.

Yooper16
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Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Yooper16 » Wed Sep 04, 2019 4:23 pm

I don't recall many of the details on spouses anymore but in you calculation keep in mind the the "basic' is free after 65 as is the supplement if it is the lower tier. So I guess depending on the length of time until you turn 65 that would need to be factored in.

Topic Author
Tdubs
Posts: 889
Joined: Tue Apr 24, 2018 7:50 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Tdubs » Wed Sep 04, 2019 6:20 pm

BruDude wrote:
Wed Sep 04, 2019 3:36 pm
Shop for your own coverage. Let's assume you are 60 years old today just as an example. $150k guaranteed for life would cost you about $265/month at a Standard health rating and about $215/month at a Preferred health rating. More coverage, less money, no brainer. FEGLI continuation is only a good idea if you can't qualify for anything else, are a smoker, or have health issues that push you into a substandard health rating category.
Thanks, where would that quote be?

Topic Author
Tdubs
Posts: 889
Joined: Tue Apr 24, 2018 7:50 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Tdubs » Wed Sep 04, 2019 6:53 pm

Tdubs wrote:
Wed Sep 04, 2019 6:20 pm
BruDude wrote:
Wed Sep 04, 2019 3:36 pm
Shop for your own coverage. Let's assume you are 60 years old today just as an example. $150k guaranteed for life would cost you about $265/month at a Standard health rating and about $215/month at a Preferred health rating. More coverage, less money, no brainer. FEGLI continuation is only a good idea if you can't qualify for anything else, are a smoker, or have health issues that push you into a substandard health rating category.
Thanks, where would that quote be?
I don't find permanent life insurance quotes close to this. Do you have a website?

peseta
Posts: 116
Joined: Mon Mar 09, 2015 11:40 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by peseta » Wed Sep 04, 2019 7:43 pm

Bronko wrote:
Wed Sep 04, 2019 2:22 pm
FEGLI is over priced. I keep only the lowest amount offered. WAEPA is absolutely the best option for federal employees. Plus every year I've gotten a significant rebate check. Check it out and save some money.
Agree that FEGLI is very overpriced. When I shopped insurance a few years ago, WAEPA was also significantly more expensive than private-sector life insurance. I got a policy from my insurer that was less than half the price of WAEPA. FWIW, I was fortunate enough to be in the highest rating category, so this might not work out for folks with significant health issues. But I think all feds should at least shop the market before picking WAEPA (which, I agree, is superior to FEGLI).

peseta

Topic Author
Tdubs
Posts: 889
Joined: Tue Apr 24, 2018 7:50 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by Tdubs » Wed Sep 04, 2019 8:24 pm

peseta wrote:
Wed Sep 04, 2019 7:43 pm
Bronko wrote:
Wed Sep 04, 2019 2:22 pm
FEGLI is over priced. I keep only the lowest amount offered. WAEPA is absolutely the best option for federal employees. Plus every year I've gotten a significant rebate check. Check it out and save some money.
Agree that FEGLI is very overpriced. When I shopped insurance a few years ago, WAEPA was also significantly more expensive than private-sector life insurance. I got a policy from my insurer that was less than half the price of WAEPA. FWIW, I was fortunate enough to be in the highest rating category, so this might not work out for folks with significant health issues. But I think all feds should at least shop the market before picking WAEPA (which, I agree, is superior to FEGLI).

peseta
Who did you go with?

chalet
Posts: 27
Joined: Wed Aug 28, 2019 9:59 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by chalet » Wed Sep 04, 2019 10:32 pm

right now, my plan is to keep the free version (75% reduction).

if I work long enough to qualify.

BruDude
Posts: 3092
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by BruDude » Wed Sep 04, 2019 10:39 pm

Tdubs wrote:
Wed Sep 04, 2019 6:20 pm
BruDude wrote:
Wed Sep 04, 2019 3:36 pm
Shop for your own coverage. Let's assume you are 60 years old today just as an example. $150k guaranteed for life would cost you about $265/month at a Standard health rating and about $215/month at a Preferred health rating. More coverage, less money, no brainer. FEGLI continuation is only a good idea if you can't qualify for anything else, are a smoker, or have health issues that push you into a substandard health rating category.
Thanks, where would that quote be?
Those numbers were with Lincoln National but you won't find them online many places. Most sites are only capable of quoting term policies.

3504PIR
Posts: 882
Joined: Mon Jul 26, 2010 2:46 am

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by 3504PIR » Thu Sep 05, 2019 12:22 am

Spiff wrote:
Wed Sep 04, 2019 12:17 pm
I did not keep FEGLI after I retired because it's the most over priced insurance on the planet. If you're in reasonable health, you should be able to get a term policy to cover the gap. The only way I would consider the FEGLI policy is if you wouldn't be able to obtain insurance from any other provider due to health issues.
+1. I laughed out loud when the nice retirement counselor brought it up. That being said, it someone has health or lifestyle issues for getting a decent rate for term insurance, I think it is worth looking at.

peseta
Posts: 116
Joined: Mon Mar 09, 2015 11:40 pm

Re: Federal Employees Group Life Insurance Basic Policy After Retirement

Post by peseta » Thu Sep 05, 2019 6:04 am

Tdubs wrote:
Wed Sep 04, 2019 8:24 pm
peseta wrote:
Wed Sep 04, 2019 7:43 pm
Bronko wrote:
Wed Sep 04, 2019 2:22 pm
FEGLI is over priced. I keep only the lowest amount offered. WAEPA is absolutely the best option for federal employees. Plus every year I've gotten a significant rebate check. Check it out and save some money.
Agree that FEGLI is very overpriced. When I shopped insurance a few years ago, WAEPA was also significantly more expensive than private-sector life insurance. I got a policy from my insurer that was less than half the price of WAEPA. FWIW, I was fortunate enough to be in the highest rating category, so this might not work out for folks with significant health issues. But I think all feds should at least shop the market before picking WAEPA (which, I agree, is superior to FEGLI).

peseta
Who did you go with?
Prudential. I shopped the market with an online broker.

peseta

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