Life
Insurance Means Peace of Mind for You and Your Family
Almost everyone needs life insurance; how much is for you to
decide. Through the Federal Employees' Group Life Insurance (FEGLI)
Program, you have several choices in selecting the amount of life
insurance that's right for you. FEGLI offers:
Basic insurance: equal to your salary rounded up to the next even
thousand, plus two thousand dollars, and
Three types of Optional insurance:
Option A - Standard, in the amount of $10,000;
Option B - Additional, in an amount from one to five times your
annual rate
of basic pay after rounding your salary up to the next even
$1,000;
Option C - Family, one to five multiples of coverage for your
spouse and
your eligible dependent children. Each multiple is equal to $5,000
for the
death of your spouse and $2,500 for the death of each eligible
dependent child.
Some important points to keep in mind:
 If
eligible, you are automatically covered under Basic life
insurance, unless you waive it.
You
must take action, within strict time limits, to elect Optional
insurance. If you elect it when you are first eligible, you can
get it without having to provide medical information to prove
insurability.
The
FEGLI Program offers group rates and convenient payroll
deductions.
The
U.S. Postal Service pays the entire cost of your Basic life
insurance. You pay 100% of the cost of Optional insurance.
FEGLI
is group term insurance. It does not have any cash or paid-up
value. You cannot get a loan by borrowing from this insurance.
The
amount of life insurance one needs varies by individual.
Who
Is Eligible?
Most U.S. Postal Service employees, including part-time employees,
are eligible for Federal Employees' Group Life Insurance (FEGLI).
If you have a question about eligibility, see your local personnel
office. Participation is entirely voluntary. However, if you are
eligible, you are automatically covered under Basic insurance,
unless you waive this coverage. You will have Optional insurance
only if you elect it. Remember, there are strict time limits to
elect Optional insurance.
When
Does My Coverage Begin?
Basic life insurance coverage for new employees is effective on
the first day you are in a pay and duty status in an eligible
position, unless you waive this coverage before the end of your
first pay period. After your first pay period, you may cancel
Basic at any time; the cancellation will be effective at the end
of the last day of the pay period in which your local personnel
office receives your cancellation.
Optional insurance for new employees is effective on the first day
you are in a pay and duty status in an eligible position on or
after the day your local personnel office receives your election.
You only have 31 days from the date of your appointment to an
eligible position to elect Optional insurance. Your opportunities
to enroll in Optional insurance after those 31 days are limited.
Pay and duty status means you are not on annual leave, sick leave,
donated leave, excused absence, or otherwise absent from duty.
New employees must complete a Life Insurance Election (SF 2817) to
cancel Basic insurance or to elect Optional insurance. If you do
not complete an election form, you will automatically be covered
under Basic insurance only.
What
Is Basic Insurance and How Much Does it Cost?
Basic insurance provides term life insurance at group rates. The
U.S. Postal Service pays the entire cost of your Basic insurance.
If you are eligible, you are automatically covered under Basic
insurance, unless you waive this coverage.
Your Basic Insurance Amount (BIA) is equal to the greater of (a)
your annual rate of basic pay rounded up to the next even $1,000
plus $2,000, or (b) $10,000.
Basic insurance also provides an Extra Benefit to employees under
age 45, at no additional cost. This Extra Benefit doubles the
amount of Basic insurance payable if you die when you are age 35
or younger. The Extra Benefit decreases 10% each year until there
is no Extra Benefit if you die at age 45 or older.
How Do I Choose the Right Amount of Life Insurance?
Purchasing life insurance is a personal decision that only you can
make. You should first consider the funds your survivors will need
for immediate expenses, such as: uninsured medical costs, funeral
expenses, lawyers' fees to settle an estate, debts, and taxes.
Young single people, who often don't buy life insurance because
they have no dependents, should consider that funeral expenses can
amount to thousands of dollars and should be provided for in some
way.
Here are some very general guidelines that may help you. Not
everyone will need the same amount of life insurance. Fill in the
blanks to estimate your family's needs. If a particular line
doesn't apply, or you think it is too much coverage, just skip it.
These results are just rules of thumb. For a complete analysis of
your needs, you may want to consult a financial planner.
How Much Do I Need?
So you've decided that life insurance is a good idea. Now you'll
want to determine how much you'll need. This simple chart can help
you come up with an estimate. Fill in the blanks to estimate your
family's needs.
LIFE INSURANCE... HOW MUCH DO I NEED?
1. Multiple of your annual income (in dollars) that you wish to
provide your family if something were to happen to you
$ __________(1)
2. Annual expenses above and beyond daily living costs for you and
your dependents (e.g., tuition, care for a disabled child or
parent)
+ __________(2)
3. Emergency funds (3 to 6 months of living expenses)
+ __________(3)
4. Estimated amount for your funeral expenses (U.S. average is
$5,000 to $10,000)
+ __________(4)
5. Total the estimate of your family's needs (add lines 1 through
4)
= __________(5)
6. Your total liquid assets (e.g., savings accounts, CDs, money
market funds, existing life insurance)
- __________(6)
7. Subtract line 6 from line 5 and enter the difference here:
= $__________(7)
The net result (line 7) is an estimate of the shortfall your
family could face upon your death. Remember, these results are
just rules of thumb. For a complete analysis of your needs, you
may want to consult a financial planner. The maximum coverage on
your life available through FEGLI is about six times your salary
(or about seven times for enrollees age 35 or under), through a
combination of Basic, the Extra Benefit, Option A ($10,000), and
Option B (maximum of 5 times your salary). |
