Federal Employee Group Life Insurance, also known as FEGLI, is group term life insurance offered to federal employees through MetLife. Although this benefit is widely used among federal employees, many things are misconstrued or misunderstood about it. In this article, we are going to learn the difference between five FEGLI myths vs. facts.
Myth: FEGLI coverage is free to all federal employees.
Fact: This is partially true; basic coverage is free to postal employees. In most cases, though, people tend to elect the other available options under FEGLI, increasing their premium. With that being said, FEGLI can still be affordable up to age 45; when your coverage begins to decrease and your premiums increase. When that time comes, we can discuss other life insurance that could replace FEGLI.
Myth: FEGLI is mandatory coverage for federal employees.
Fact: FEGLI is not mandatory at all. Federal employees are automatically enrolled into FEGLI when hired by the government, but they can opt-out if needed. I typically recommend that postal employees keep the basic coverage because it is free, but review everyone’s circumstances on a case-by-case basis to help determine the best fit.
Myth: FEGLI is a whole life policy.
Fact: As I stated in the introduction, FEGLI is a group term policy. Many people think that their FEGLI policy holds a monetary value when it only pays out in the event of the policyholder’s death. When you are younger and just starting out, this could be more affordable and better suit your needs at the time. If you are looking for an investment-grade life policy that builds cash value, there are many alternatives out there that could be established at the same price you are paying for a term policy.
Myth: You can only change your life insurance during open enrollment season.
Fact: Although you can’t increase your policy value unless there is an open enrollment season, you can decrease your policy value at any time.
Myth: FEGLI is the best life insurance available to federal employees.
Fact: The reality is FEGLI is a group policy, and the price will increase every five years because it’s a pool of every federal employee in the nation that can get that policy regardless of health conditions. A traditional life insurance policy is based on one individual’s health, so if you are in good health, moving out of FEGLI could be a better and less expensive life policy for you. If you are in poor health, then FEGLI is probably the better choice. I can’t stress enough the importance of exploring every option when it comes to life insurance.
Ultimately the truest fact is that there is no blanket answer when it comes to life insurance. You should always meet with a financial professional like myself that can help you better understand what is available to you based on your own individual situation. That is why I meet with clients one-on-one to do a personalized benefit analysis, and help them make the best decision for themselves and their family. It’s always appropriate to check on the status of your life insurance, please call me to schedule an appointment to go over your policy.
- Galen Bargerstock – President of Government & Civil Employee Services, LLC
Registered Representative, offering securities through Encompass Investments, a division of Verity Investments, Inc. [Member FINRA, SIPC]. Government & Civil Employee Services, LLC (GCES) is not affiliated with Verity Investments, Inc. Government & Civil Employee Services, LLC is not affiliated with or sponsored by any federal or state governmental agency.