Cost Comparison: Individual Term Life Insurance versus FEGLI

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	Example # 1 Male age 45 Nonsmoker in Preferred Health for $250,000:
	Example # 2 Female**** age 45 nonsmoker in preferred health, $250,000:
	Example # 3 Male age 55 Nonsmoker in Preferred Health for $250,000:
	Example # 4 Female**** age 55 Nonsmoker in Preferred Health for$250,000:
	Cost Comparison Summary
	Resources Individual Term Life Insurance versus FEGLI

Employees of our federal government are entitled to group term life insurance benefits through the government sponsored Federal Employees Group Life Insurance program (FEGLI). The FEGLI program became effective in 1954 and covers over 4 million federal workers and retires. Additionally, FEGLI pays out billions of dollars in claims every year.

However, when actual FEGLI rates are compared with ordinary level term life insurance, in most cases, term life insurance is a far better choice. Since the cost of Optional Insurance (Standard, Additional and Family) offered by FEGLI is based on five year increasing term insurance, level term insurance is usually cheaper over any 10, 15 or 20 year period. Below is a comparison of actual policy costs of FEGLI coverage versus a competitively priced 10-year guaranteed level term life insurance policy that can be purchased in the open marketplace.

In each of the examples below, prices for the Federal Employee’s Group Life Insurance assume Additional (Option B) coverage and are based upon the rates published in the most current FEGLI Handbook. The premium mode is monthly and the insurance face amount for each example is $250,000. Costs are compared over a 10 year period.

For the level term life insurance, rates are quoted based on a 10-year guaranteed level term policy with both preferred best and preferred nonsmoker health classes with no policy riders included. We have reviewed the marketplace and the lowest priced policies from the most competitive term life insurance companies are listed. All life insurance companies quoted currently maintain an A+ or better rating with AM Best Services.
 
All quotes are rounded to the nearest $1.00

Example # 1 Male age 45 Nonsmoker in Preferred Health for $250,000:

FEGLI (Option B) Term Life Insurance (5 year increasing term):

The average 10 year cost of the FEGLI coverage is $715 annually or $61 monthly.

Individual 10-year Level Term Life Insurance*

In the above example, the monthly cost of FEGLI term life insurance exceeds the 10-year level term rates at the preferred plus health class by $45 per month or 281%. The 10-year level term option saves $5,400 over the entire 10 year period.

If we assume the preferred health class, the level term option still saves $39 monthly over FEGLI. That equates to a savings of $4,680 over the 10 year period.

Example # 2 Female**** age 45 nonsmoker in preferred health, $250,000:

FEGLI (Option B) Term Life Insurance (5 year increasing term):

Just as in the example above, the average 10 year cost of the FEGLI coverage is $715 annually or $61 monthly****.

Individual 10-year Level Term Life Insurance*

For example # 2, just as in example # 1, the monthly cost of FEGLI term life insurance exceeds the 10-year level term rates at the preferred plus health class by $45 per month or 281%. The 10-year level term option saves $5,400 over the entire 10 year period.

If we assume the preferred health class, the level term option still saves $41 monthly over FEGLI. That equates to a savings of $4,920 over the 10 year period.

Example # 3 Male age 55 Nonsmoker in Preferred Health for $250,000:

FEGLI (Option B) Term Life Insurance (5 year increasing term):

The average 10 year cost of the FEGLI coverage is $2,640 annually or $220 monthly.

Individual 10-year Level Term Life Insurance*

In the above example, the monthly cost of FEGLI term life insurance exceeds the 10-year level term rates at the preferred plus health class by $178 per month or 424%. The 10-year level term option saves $21,360 over the entire 10 year period.

If we assume the preferred health class, the level term option still saves $171 monthly over FEGLI. That equates to a savings of $20,520 over the 10 year period.

Example # 4 Female**** age 55 Nonsmoker in Preferred Health for$250,000:

FEGLI (Option B) Term Life Insurance (5 year increasing term):

Just as in example # 3 above, the average 10 year cost of the FEGLI coverage is $2,640 annually or $220 monthly****.

Individual 10-year Level Term Life Insurance*

In the above example, the monthly cost of FEGLI term life insurance exceeds the 10-year level term rates at the preferred plus health class by $191 per month or 658%. The 10-year level term option saves $22,920 over the entire 10 year period.

If we assume the preferred health class, the level term option still saves $183monthly over FEGLI. That equates to a savings of $21,960 over the 10 year period.

Summary

The examples above clearly indicated the huge price discrepancies between the Federal Employee’s Group Life Insurance program (Option B Coverage) and ordinary level term life insurance. Based on the comparisons above, the only reason anyone would purchase Option B additional insurance would be if they were uninsurable at the time of employment. In most cases though, even individuals in average or less than average health can still qualify for more competitive term life insurance rates in the open market.

If you have term life coverage through the FEGLI program, you need to take a careful look at long term costs based upon your age and health. There is absolutely no reason you should have to overpay for term life insurance. For a custom term life quote click here or call MEG Financial today at (877)583-3955.

References Life Insurance for Federal Employees Advantages and Disadvantages of the FEGLI Insurance Plan What Happens to My FEGLI Benefits at Retirement? Federal Employee’s Group Life Insurance Program Booklet Get a Custom Term Life Insurance Quote

* All Illustrated rates are based on a 10-year guaranteed level term policy and include both the preferred best and preferred nonsmoker health class with no policy riders. Price quotes are from the most competitive term life insurance companies at the respective ages and health classes and may not be available in all states. All life insurance companies quoted currently maintain an A+ or better rating with AM Best Services.

** For more information on health classifications see, life insurance underwriting health classes defined.

*** Premiums paid monthly are usually subject to a surcharge of 4-8% depending on the insurance company.

**** The FEGLI does not distinguish between Male and Female rates. Therefore the FEGLI term life insurance costs are identical at identical ages.