YOUR FEDERAL EMPLOYEES GROUP LIFE INSURANCE (FEGLI)

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1 YOUR FEDERAL EMPLOYEES GROUP LIFE INSURANCE (FEGLI)

2 HOW DOES IT WORK?

3 The only way that any benefit will ever be paid from FEGLI is if you

4 DIE.

5 There are no cash or loan values available to you through FEGLI Death Benefits Only!

6 HOW IS IT PAID? The premium for the FEGLI Program is removed from your paycheck. The amount of the premium is based on your wages and increases every year with your salary. Example based on Approximate Annual Salary: $20, $3.00 Per Pay Period $30, $4.50 Per Pay Period $40, $6.00 Per Pay Period $50, $7.50 Per Pay Period

7 Here s How It Works:

8 Your Insurance Program will terminate when your employment terminates. Conversion privileges are available at time of termination or retirement.

9 What does your FEGLI program provide during employment and pre-age 65 retirement?

10 BASIC LIFE INSURANCE COVERAGE: Annual wage (rounded up to next $1,000) plus $2,000 COST**: $.15 per pay per $1,000 (bi-weekly) payable until age 65. ACCIDENTAL DEATH & DISMEMBERMENT - YES DURATION:* To age 65 or retirement, then three options are offered: OPTION (1) 75% Reduction Starting at age 65 or retirement, reducing 2% per $1,000 per month to 25% of the original value, taking 3 years -2 months or until employee is age 68 plus 2 months. No cost after retirement. OPTION (2) 50% Reduction Starting at age 65 or retirement, reducing 1% per $1,000 per month to 50% of the original value, taking 4 years -2 months or until employee is age 69 plus 2 months. COST: $.64 per $1,000 per month after date of retirement OPTION (3) No Reduction COST: $1.94 per $1,000 per month after date of retirement. * The Basic Insurance amount is provided at no cost to the Postal Employee until date of retirement. Then payable until age 65. ** As employee s income increases, the bi-weekly deduction increases.

11 EXTRA BENEFIT AMOUNT EXAMPLE Hire: Age 25 Average Accumulated Cost at Age 65* Retire: Age 65 Basic Cost: $ 8,778 Starting: GS/WG-2 Extra Benefit Cost: $ 0 Starting Salary: $20,000 Death Age 65 $ 87,000 Salary at Age65: $85,000 Death Age 68 $ 21,750 Extra Benefit $100,000 $90,000 $80,000 $70,000 Basic FEGLI FEGLI Amount $60,000 $50,000 $40,000 Extra Benefit $30,000 $20,000 $10,000 $ Age

12 EXTRA BENEFIT AMOUNT COVERAGE: Same as Basic Insurance Amount Annual wage (rounded up to next $1,000) plus $2,000 This coverage is automatically included IF under age 45 AND enrolled in Basic Insurance Amount. COST: None DURATION: At age 35 coverage reduces 10% per year to age 45, then NO coverage. ACCIDENTAL DEATH & DISMEMBERMENT - YES

13 OPTION A - STANDARD EXAMPLE Hire: Age 25 Average Accumulated Cost at Age 65* Retire: Age 65 Basic Cost: $ 8,778 Starting: GS/WG-2 Extra Benefit Cost: $ 0 Starting Salary: $20,000 Option A Cost: $ 2,223 Salary at Age65: $85,000 Death Age 65 $ 97,000 Death Age 68 $ 24,250 Basic + Extra+ Option A Benefit $120,000 $100,000 $80,000 FEGLI Amount $60,000 Extra Benefit Option A Basic FEGLI $40,000 $20,000 $ Age

14 OPTION A - STANDARD COVERAGE: $10,000 COST:* Bi-weekly for $10,000 UP TO AGE 35 $ $ $ $ $ $ $6.00 As employee s age increases, bi-weekly deductions increase. DURATION: To retirement. Starting at age 65, or retirement (whichever is later) reducing 2% per month to 25% of original value, taking 3 years and 2 months or until employee is age 68 plus 2 months. Employee may continue this plan into retirement only if the employee is continuing the Basic Life Insurance.

15 OPTION B ADDITIONAL EXAMPLE Hire: Age 25 Average Accumulated Cost at Age 65* Retire: Age 65 Basic Cost: $ 8,778 Starting: GS/WG-2 Extra Benefit Cost: $ 0 Starting Salary: $20,000 Option A Cost: $ 2,223 Option B Cost: $ 76,082 Total Cost: $ 87,083 Salary at Age65: $85,000 Death Age 65 $ 522,000 Death Age 69 $ 24,250 Basic + Extra + Option A + Option B Benefit $600,000 $500,000 $400,000 FEGLI Amount $300,000 $200,000 Option B Basic FEGLI $100,000 Extra Benefit Option A Basic FEGLI $ Age

16 OPTION B ADDITIONAL Coverage: Allows the employee to choose additional coverage up to 5 times annual wage. Bi-weekly cost* per $1,000 of coverage UP TO AGE 35 $ $ $ $ $ $ $ $ $ $ $2.40 *As employee s age increases, bi-weekly deductions increase. DURATION: To retirement. Starting at age 65 or retirement (whichever is later), reducing 2% per month for 50 months, or until employee is age 69 plus 2 months. Then, NO coverage, or, Starting at age 65, employee may maintain coverage by continuing to pay the rate per thousand, according to employee s age.

17 COVERAGE: Allowed up to 5 units FAMILY OPTIONAL INSURANCE $5,000 per unit on Spouse $2,500 per unit on Children COSTS ARE AS FOLLOWS: Bi-weekly per unit EMPLOYEE AGE Under Age 35 $ $ $ $ $ $ $ $ $ $ $6.60 Children are covered until age 22. ACCIDENTAL DEATH & DISMEMBERMENT NONE Duration: To retirement. Starting at age 65, or retirement (whichever is later) reducing 2% per month for 50 months, or until employee is age 68 plus 2 months. Then, NO coverage, * *or, starting at age 65, employee may maintain coverage by continuing to pay the rate per thousand, according to employee s age.

18 RETIREES AT AGE 65 BASIC AMOUNT: Reduces 2% per month for 38 months to 25% of the value at age 68 plus 2 months. More coverage may be retained after age 65 for additional premiums. Refer to Federal Employees Almanac. EXTRA BENEFIT AMOUNT: Already gone. OPTION A STANDARD: Reduces 2% per month for 38 months to $2,500 at age 68 plus 2 months. Higher coverage option cannot be retained. OPTION B ADDITIONAL: Reduces 2% per month for 50 months; then COVERAGE WILL CEASE**.. EXAMPLE Approximate coverage at age 69 Assuming 75% Reduction Assuming all options and 5 times the salary.$85,000 Coverage at age 65 $522,000 Coverage at age 70 $ 24,250- (Full Reduction Option) Total Career Cost: Approximately $87,083 ** Based on premiums stopping at age 65, you can maintain coverage for additional premium.

19 AVERAGE FEGLI COVERAGE DURING LIFETIME At age 65 this client had over $500,000 in life insurance. By age 70 they now have just over $24,000! This client paid over $87,000 during the duration of their employment. Basic + Extra + Option A + Option B Benefit $600,000 $500,000 $400,000 FEGLI Amount $300,000 $200,000 Option B Basic FEGLI $100,000 Extra Benefit Option A Basic FEGLI $ Age

20 NOTES