If you are a federal employee then you probably have FEGLI or Federal Employee Group Life Insurance (unless you’ve gotten rid of it already).
Most federal employees sign up for it when they are first hired and never think about it again.
But is it worth the thousands of dollars you have already paid for it and will continue to pay if you keep it?
Maybe, but your goal should be to get rid of it as soon as possible.
Spoiler alert: You are probably paying more than you think!
When to Get Rid of FEGLI
Like I mentioned above, life insurance is not something that everyone needs and we should all be trying to get to a point financially where we don’t need life insurance.
Because once you don’t need life insurance you can then use what you were paying on premiums to increase your bottom line, not the bottom line of the insurance company.
But at the same time, we don’t want to get rid of our life insurance before we can afford to.
Here are the things to watch for.
When You Don’t Need It Any More
For most of us, there comes a time in our lives when we have enough money/assets so that our loved ones will be fine financially if we pass away.
For some this happens early and for others it doesn’t happen until retirement.
To figure out if you are there yet, just think about what resources your spouse/kids/dependents would have left without you and if it is enough for them to be comfortable.
If they will be just fine financially then you probably don’t need any life insurance, but if you aren’t confident they will be okay, then you want to keep/get life insurance to cover any gaps.
And ironically, once you get to a strong enough point financially that your family will be fine without you, then saving your life insurance premiums will make you even stronger financially.
When You Can Replace It With a Cheaper/Better Policy
FEGLI has 4 different parts. Basic, A, B, and C. Each is priced differently over time.
But in today’s article I am going to focus on part B as that is often the most expensive.
In your 20s, 30s, and early 40s, FEGLI B is priced fairly competitively but the price starts to go crazy as you get older. Per the chart below, the price comes close to doubling every 5 years beyond 45.
|Age Group||Biweekly, per $1,000||Monthly, per $1,000|
|80 and over||$2.88||$6.240|
If you are already in or approaching 45+ then you will want to shop around to see if there are private term insurance policies that can give you a better price.
Private insurance can be exceptionally attractive especially if you are in good health.
If you have health issues that you may not be able to get outside insurance so FEGLI may be your best bet.
While I don’t know exactly when you should get rid of your FEGLI (or other life insurance) you will want to review your coverage every few years to make sure it still makes sense at the price you are paying for it.