As a member of the mid-career cohort in your thirties and forties, you likely have financial responsibilities that require more prudent evaluation than when you first entered the workforce. At this stage, you have a stable career with strong benefit options – two things that mid-career Federal service employees are fortunate to enjoy.
FEGLI was likely one of these benefits you first enrolled in as a new GS employee; however, the level of coverage that may have been sufficient then may not be able to protect your family in the way that you want now.
- Nearly half of married-couple families (48.8%) rely on two incomes and roughly 40% of families include children under age 18.
- Over 60% of homeowners still have a mortgage, and the average age of first-time home buyers is 33.
- People who only possess group term life insurance through their employer have an average coverage shortfall of $225,000.
It’s worth noting that FEGLI is traditionally less flexible in terms of coverage and underwriting specific to family needs.
For instance, your Basic Insurance Amount provides an Extra Benefit that doubles the amount of Basic insurance payable if you die when you are age 35 or younger. However, this multiplier reduces 10% per year from ages 35-45 then disappears completely.
Mid-career professionals with families may want to consider additional coverage through the options outlined below.
What FEGLI Offers Families
- Under FEGLI, you may expand coverage through Option A, Option B, or Option C – but each comes with significant limitations:
- Option B coverage levels max out at five times one’s salary. While this amount may seem appropriate at first glance, coverage exceeding this maximum is generally recommended for those who carry a mortgage, have a spouse and/or have children.
- Option C allows you to enroll your spouse or dependent child, but you must do so within the tight open enrollment window or in connection with a large life event such as marriage, divorce, the death of spouse, or the addition of an eligible child. In addition, as is the case with Option B, after the open enrollment window group insurance is generally underwritten in a “pass/fail” fashion that does not typically provide any gray area for people who have common medical conditions such as sleep apnea, diabetes or a history of mental illness.
Why Supplementing Might Make Sense
There’s no doubt that FEGLI provides a valuable benefit that many in the private sector may not have access to or may not be able to afford. In light of its limitations, it’s typically best practice to supplement FEGLI with policies from other providers to help make sure your family’s coverage is comprehensive. In particular, outside providers can often offer stronger spousal and child coverage and greater customization at affordable rates.
If the last few months have taught us anything, it is that life is unpredictable and mortality can strike at any time. This should serve as a reminder of how important it is to have a personalized policy, often taking the form of multiple policies layered on top of one another to protect specific risks like a mortgage or a child until they graduate college.
Given that many Federal employees rarely consider their insurance needs after enrolling in FEGLI initially, a mid-career check-in is the time to evaluate what steps can be taken to update your coverage and protect your loved ones.
Greg Klingler, CFP, ChFEBC, is Director of Wealth Management for the Government Employees’ Benefit Association (GEBA). He advises state and federal employees in retirement planning using pensions, survivor pensions, employer sponsored insurance, and retirement plans as well as portfolio analysis, estate planning and college planning.