FEGLI is a life insurance program available to federal employees and their dependents. It is administered by the Office of Federal Employees’ Group Life Insurance (OFEGLI) and offers various types of coverage, such as Basic, Standard, Additional, and Optional. Federal employees can select the coverage that suits their needs and those of their eligible family members, and premiums are deducted from their paychecks.
Before deciding to cancel your FEGLI coverage, it is vital to carefully consider your financial situation and the potential consequences of losing this coverage. Here are a few things to consider:
Future Earnings Potential
If you are relatively young and have a long career ahead of you, it may be worth keeping your FEGLI coverage in place, even if it is costly. If you unexpectedly pass away, your coverage could provide financial security for your family and help them maintain their current lifestyle.
Before canceling your FEGLI coverage, assessing your coverage needs is a good idea. For example, do you have other sources of life insurance, such as a private policy or coverage through your employer? If not, it may be worth keeping your FEGLI coverage in place.
Obtaining a private life insurance policy may be more difficult or costly if you have any pre-existing health conditions. In this case, it may be worth keeping your FEGLI coverage, even if it is more expensive.
While FEGLI can be a valuable benefit for federal employees, there may come a time when maintaining coverage is no longer necessary or cost-effective. Here are some situations in which you may want to consider canceling your FEGLI coverage:
Retirement or Leaving Federal Service
If you are planning to retire or leave federal service, you may no longer need the life insurance coverage provided by FEGLI. Therefore, it may be more financially advantageous to cancel your FEGLI coverage and obtain a private life insurance policy that meets your specific needs.
FEGLI premiums are based on your age, salary, and the amount of coverage you have. As you get older, your premiums may increase significantly, making the cost of maintaining coverage less affordable. If your FEGLI premiums become too high, it may be worth considering canceling your coverage and looking for a more cost-effective alternative.
Change in Family Situation
If your family situation has changed, you may need to adjust your life insurance coverage accordingly. For example, if you have become a single parent with young children, you may want to increase your coverage to protect your family in the event of your unexpected death. On the other hand, if your children have grown up and are financially independent, you may not need as much coverage. In these cases, it may be worth considering canceling your FEGLI coverage and obtaining a private life insurance policy that better meets your needs.
Suppose you already have a significant amount of life insurance coverage through other sources, such as a private life insurance policy or a policy through your employer. In that case, you may not need the additional coverage provided by FEGLI. In these cases, it may be more cost-effective to cancel your FEGLI coverage and rely on your other policies for protection.
While FEGLI can be a valuable benefit for federal employees, there may come a time when it is no longer necessary or cost-effective to maintain coverage. For example, suppose you are planning to retire or leave federal service. If the cost of your premiums becomes too high, your family situation has changed, or you already have sufficient coverage through other sources, it may be worth considering canceling your FEGLI coverage. However, it is essential to carefully consider your financial situation and the potential consequences of losing this coverage before deciding.
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.