FEGLI in Maryland
Federal Employee Group Life Insurance
Your premiums go up as time goes by. Your death benefit go down when you’re 35. You build no cash value and if you leave the government without retiring you lose your insurance.
When you start with the Federal Government you are supplied with “Basic” insurance equal to about $2,000 more than your salary. (If you’re under 45 you get two times your salary). You probably also bought $10,000 of “Option A –Standard” and “Option B” which is a multiple of up to five times your annual pay. There are no health questions. They don’t ask about smoking, weight, diabetes or anything else. So everybody pays the same. That means that if you’re a healthy non-smoker you are paying more to keep the insurance cheaper for the non-healthy or smoker.
When you’re young it’s so inexpensive you really don’t even see it. If you’re making $50,000 a year and you’re under 35 that $364,000 of insurance costs only $15.64 per pay period ($405 per year).
But what happens when you’re 45? You’ll only have $312,000 and it’s costing $31.20 per pay period (That’s $811 per year).
But what happens when you’re 55? You’ll only still have $312,000 and it’s costing $80 per pay period (That’s $2,080 per year).
But what happens when you’re 65? You’ll still only have $312,000 and it’s costing $193.80 per pay period (That’s $5,038 per year). And it keeps going up after that! When you stop paying you will have a death benefit of less than $30,000 for life.
The FEGLI Alternative
If you leave the Federal Government without retiring can you keep the insurance? No.
Do you have cash value? No.
Do you get money back by dropping the policy? No.
Do you have a choice? Yes.
This 35 year old could purchase the $312,000 of insurance through age 70 and have $9,500 of cash value at age 65 or continue to pay $653 per year and keep $30,000 death benefit for life. If this person drops the insurance at age 65 and cashes in the policy they will have spent $9,855 a savings of $37,940! If they want to keep the $30,000 of insurance for life and they live to age 85 they will have spent over their entire working life $32,650 and saved $15,145 off of the FEGLI plan.
Even your pension plan can likely be improved by consulting with the trained professionals at Abrams/Mendelsohn Insurance.
Abrams/Mendelsohn Insurance, Inc.
722 Cockeys Mill Rd
Reisterstown, MD 21136
Phone: (410) 517-2055
- Owings Mills
- Perry Hall
- Ellicott City