FEGLI is so expensive because they do not ‘underwrite,’ meaning they accept everyone regardless of their health situation. Upon employment with the government, any employee sign up for FEGLI even that person is a you are a smoker, has a history of heart disease or any other major chronic illnesses, even cancer.
Let’s compare it to auto insurance. Imagine you have zero points, no accidents and drive a safe vehicle. Now imagine Imagine your next-door neighbor has teenager that has been in two accidents, has two speeding tickets, owns a Mustang and routinely cruises through the neighborhood at 45mph.
Now imagine you pay the same exact rate for auto insurance. Not exactly fair.
FEGLI accepts everyone, even people with conditions or illnesses for which most insurance companies will deny overage. For those people, this is an outstanding benefit! However, it comes at a cost and that cost is spread out among all 4 million plus federal employees. Including you.
Although each situation is unique, by the time a healthy employee reaches their 40’s, they may be paying DOUBLE the average rates of outside life insurance carriers. By the time that person hits their 50’s, they may be paying 3 times the cost of any private carrier.
When we tally the potential cumulative cost of FEGLI over a long career, the costs savings are literally tens of thousands of dollars. No kidding.
The answer is NO.
FEGLI is ONLY the better option if you’re in poor health and private insurance would cost significantly more. For most anyone else, there are ZERO features and benefits that private insurance through a A-rated company couldn’t provide at lower cost.
Trust me. You want to get the medical exam. The cost savings for 30 minutes of your time is worth it.
Remember, FEGLI is expensive for the specific reason that they don't ask about health. The system has no way of assessing which person is healthy, exercises and doesn’t smoke and therefore deserves a cost break and which person is not any of the above.
The exams are quick and designed to be convenient for you. They’ll even come out to your house and they rarely last longer than 30 minutes.
Underwriting is the process by which the life insurance company figures out the price you will pay for your life insurance. Factors that affect price include age, sex (women get better rates) medical history, weight and smoking status. The healthier you are, the better the price. The process can take as little as 10 days and as long as 4 weeks depending on your health situation.
We ONLY work with A-Rated insurance companies such as Lincoln National, Brighthouse, Principal, Transamerica, John Hancock, Banner Life, Nationwide, Guardian, Prudential and more.
‘Level term’ life insurance means that the premium of the policy is guaranteed not to change over the ‘term’ of the policy (e.g. 10,15.20 or 30 year increments) For example, if apply for a 20 year policy, the rate will stay the same for the entire 20 years, so long as you pay the premium.
On the other hand, FEGLI premiums not guaranteed to remain the same. They are GUARANTEED to increase in price every year.
We are an independent firm and are not affiliated with the insurance companies carriers other than our ability recommends and implement their life insurance policies. Therefore, we are not paid, cajoled or urged to recommend one insurance company over another. No fancy trips, no extra bonuses.
Just like in our wealth management practice, we fiercely protect our objectivity so our clients know they are getting ‘best interest’ type of advice for their life insurance needs.
Applying for coverage requires no out of pocket money and no commitment. The insurance companies cover the cost of applying and the only cost to you is a little time. You also won’t get the heavy sales pitch from us. We think the costs savings speak for themselves but ultimately, you’ll be the judge of that.
Thankfully, technology has allowed insurers companies to streamline this process and make the experience less like going to the dentist. In summary, after determining that you may qualify for a FEGLI cost savings, you’ll need to complete an application online with one our professionals and go through an exam. That's basically it!
If you decide to move forward, we’ll assist you in cancelling FEGLI. But only AFTER the new, lower priced policy is locked in place.