Learn About Basic and Optional Life Insurance Coverage

FEGLI comes with two types of coverage – Basic and Optional. Whether the employee is covered under CSRS (the Civil Service Retirement System) or FERS (Federal Employees Retirement System) the coverage is identical for FEGLI. While Basic FEGLI coverage is automatically issued in the employee’s name as soon as they start working, the employee will likely want to elect one of more of the three optional coverage choices that are available. The type and amount of any optional coverage that you select and which federal retirement benefits you choose to keep will be based on whichever best fit your needs and as you age and your family circumstances change your selections may also change. Both full time and part time federal employees can participate in the FEGLI program, however, it is voluntary and the plan can be cancelled if you are able to find cheaper life insurance coverage or if don’t require insurance at that moment.

The Basic Insurance Coverage

The Basic Insurance Coverage under FEGLI is automatically issued in the employee’s name as soon as service begins, unless the employee waives the coverage, and acts as immediate protection for the employee’s beneficiaries in the event of death.

• The total amount for this federal employee life insurance is a sum of the employee’s annual basic pay rounded up to the next $1000 plus an additional $2000.

• Two thirds of the costs of this insurance is paid by the employee while the rest is paid by the Government.

o U.S. Postal Service pays 100% of the Basic FEGLI costs for Postal employees. Any Optional Insurance selected is paid for by the employee.

The Optional Insurance Coverage

Apart from the Basic plan, there are three optional federal employee life insurance plans that you can elect under FEGLI. However, you must have basic insurance in the first place to go for any of these options. The cost of this coverage depends upon your age and is payable by you alone without any contribution by the government.
Here are the three types of optional coverage you can go for:

Option A – Standard Optional Insurance

• This coverage amounts to a total of $10,000.

• The cost is decided as per your age, and specific age bands are defined which spell out the costs to each participant.

Option B – Additional Optional Insurance

• While Option A comes with a fixed amount of coverage, option B comes in five multiples (1, 2, 3, 4 or 5) of your annual pay (after being rounded up to the nearest next $1000).

• The cost for this insurance too depends upon the age bands defined at 35, 40, 45, 50, 55, 60, 65, and 70.

o Option B coverage is attractive especially for younger employees. As you age, however, you should always compare your FEGLI costs against other, private, term life insurance options. A huge potential cost savings can be realized if you are already 45 or older or if you intend to protect your family with life insurance beyond 50 years of age. We highly recommend the use of a FEGLI Calculator that can give you an accurate description of your FEGLI rates compared to other term life insurance options.

Option C – Family Optional Insurance

• This type of group term insurance program provides coverage for your family i.e. your spouse and any dependent children. The coverage is decided in the multiples of 1, 2, 3, 4, or 5 as per your choice.

• The multiples are equal to $5000 for your spouse and $2,500 for the eligible children. For example, if you selected a multiple of 4, you will receive $20,000 in case of death of spouse and $10,000 in the event of death of any child.

• The cost of this insurance is decided as per your age not of your family member(s). The same age bands are used for allocating the total costs.
Aside from Basic FEGLI, FEGLI Option A, FEGLI Option B and FEGLI Option C, eligible federal and postal employees are also offered additional benefits such as the Accidental Death and Dismemberment Benefit, Basic Life Extra Benefit and much more.

In case of your accidental death or dismemberment, the coverage of both Basic and Option A federal employee life insurance are doubled. On the other hand, the Basic Life Extra Benefit doubles your basic insurance amount payable if your age is less than 35. This benefit decreases by 10% with every passing year, finally stopping at the age of 45.

What You Should Know About Auto Insurance Coverage

Having an auto insurance coverage will help you protect whenever you figure in a car accident or when there is a loss to your automobile like fire and theft. You also need to be protected in case you injure another person through the use of your car or you made a damage to somebody’s property when using your car.

Auto insurance coverage is excluded from most homeowners forms thus auto insurance must be covered separately and it is called a personal auto policy. Since the personal auto policy contains property and liability auto insurance coverage, it is considered a package policy. The auto insurance policy form contains four distinct coverage with each coverage having its own conditions, agreements and exclusions.

One part of the auto insurance policy is the liability coverage. This is almost mandatory in most states in the United States. This coverage provides for the amount that the auto insurance company will pay to the victim of the car accident or to the value of the damaged property but only up to a certain amount provided in the car insurance policy. The person who caused the accident will pay any excess on the auto insurance policy limits. This coverage can be a standalone coverage or it can be combined with other coverages.

Another part of the auto insurance policy is the medical payments coverage. This coverage provides medical payment if you are injured in a car accident but only up to a certain limit of the policy. This is an optional coverage and it may only be included in the auto insurance policy if the policy includes liability coverage.

The third part of auto insurance policy is the uninsured motorist coverage which protects you, the other passengers of the vehicle and the vehicle itself from an uninsured driver. This is subject to the law and may vary from one state to another. In some states this is mandatory but in others the insured may opt out of this coverage in the policy. This type of coverage can only be written if there is also a liability coverage.

The fourth coverage of the auto insurance policy is the coverage for the damage to your car. This covers the actual physical damage to your vehicle. The policy covers the damage brought on the collision of your car and damages other than collision like fire and theft. This type of coverage can be a standalone coverage or can be written in conjunction with a liability coverage.

The personal auto policy can be written to a single individual or to the husband and wife who are on the same household. Most auto insurance coverage are written to include all of the available coverages but if you are saving money, you can choose whatever auto insurance coverage you want and opt out of the others which are not mandatory. Just be reminded to read the fine prints since there are conditions, limitations and exclusions in the auto insurance coverage.

Car Insurance Coverage – Why It Makes Sense to Have the Right One

Most people look at car insurance as a burden, one that they have to bear because of State insurance laws. They buy the bare minimum state mandated liability coverage to stay legal and carry on driving, assuming they are completely covered in case of a mishap. Yet others start with buying multiple car insurance coverages, and over time decide they need to save money, which can be done by cutting on certain coverages. The rude awakening comes when they get into an accident where they are at fault, or have their car stolen or damaged, and realize their policy did not include the necessary car insurance coverage to cover any of these events. A little bit of planning and foresight can help avoid such situations.

Car insurance isn’t rocket science, and all it takes is some understanding of the basic function of each car insurance coverage and then deciding if it’s really worth investing in or not. This is especially true if you have an old beat up car. Would you rather pay for comprehensive and collision insurance and the deductibles as well (at the time of claiming), or does it make more sense to simply go without, and save the premium and deductible money in an emergency fund for your car? Insurance is a gamble and you pay for the peace of mind from knowing that in case of an eventuality you are covered. You may or may not need to use it.

Liability or third party insurance is another area where you need to consider the particulars of your location, the driving skills of the other drivers using the car, and your financial capability to pay the other driver for any damages you might have caused, in case you are found at fault in an accident. If you drive long hours, on congested roads, or if you have a relatively inexperienced driver also driving this car, you might consider keeping a high liability car insurance coverage. TX car insurance laws for example, ask for a minimum liability of 30/60/25 starting January 2011. One in five people in TX are uninsured, so while you want to be sure you get adequately compensated in case of an accident, you might also want to buy Uninsured Motorist/Underinsured Motorist coverage if you live there.

Umbrella insurance is one of the most under rated car insurance coverages. It’s actually a very smart way to increase your liability coverage and comes in handy incase of potentially bankrupting lawsuits. You don’t want to have to pay out of your pocket in case your car hits a school bus full of kids and hurts somebody seriously or ends up totaling a high-end luxury car. It doesn’t cost too much to get $2 million umbrella insurance, and it kicks in only when the upper limits of your liability coverage have been exhausted.

Gap insurance is a good option to invest in if your car is not fully paid for and you still have to make most of the payments. In case your car is totaled, your full car insurance coverage will only pay for the car’s blue book value which factors in its depreciation amount, whereas you will still need to pay your dealer the balance installments for the car, making you upside down on your payments. Gap insurance fills this gap and helps you pay off the balance amount. However, investing in gap insurance is only recommended if you still owe most of the money on your car.

PIP or no fault coverage is mandatory in some states while it isn’t available in others. However if it is available in yours, it’s a good option to look into, after reviewing your health insurance policy. Personal Injury protection coverage takes care of medical, work loss, funeral, survivor’s loss and other maintenance expenses incurred post an accident regardless of who is found at fault in the accident; a good car insurance coverage to consider as it takes so many factors into consideration while calculating your claim account.

So next time you decide to buy yourself just a minimum liability car insurance, think twice. The liability coverage will only compensate others for injury or property damage caused by your car; it will do nothing for you. Also look at the other car insurance coverages and try to strike a good balance of rates and coverage to give you better protection in case of an unforeseen eventuality.