Federal Employee Life Insurance (FEGLI) is a group life insurance program specifically designed for U.S. federal employees, retirees, and their families. Administered by the U.S. Office of Personnel Management (OPM), FEGLI offers a variety of life insurance options to federal workers, providing them with affordable and flexible coverage tailored to different needs. Whether you are a current federal employee or a retiree, understanding FEGLI’s coverage options, benefits, and eligibility requirements is essential to making an informed decision about your life insurance needs.
In this comprehensive guide, we’ll break down the different coverage options available under FEGLI, explain how the premiums work, discuss who is eligible, and explore the various benefits this program offers. We’ll also address frequently asked questions and conclude with key takeaways to help you make the most of your federal employee life insurance coverage.
Key Takeaways
- Comprehensive Coverage Options: FEGLI provides Basic Life Insurance and several Optional Life Insurance choices, including coverage for family members.
- Affordability: FEGLI premiums are competitive, and the cost is based on your age and coverage level.
- Eligibility: All federal employees are eligible for Basic Life Insurance, and retirees can continue their coverage into retirement.
- Family Protection: Family Life Insurance allows federal employees to purchase life insurance for their spouse and children.
- Terminal Illness Benefit: The Accelerated Death Benefit offers early access to a portion of your death benefit if diagnosed with a terminal illness.
What is Federal Employee Life Insurance (FEGLI)?
Federal Employee Life Insurance (FEGLI) is a group life insurance program offered to employees of the federal government, retirees, and eligible family members. It provides life insurance coverage at competitive group rates and includes several types of life insurance policies, making it one of the largest life insurance programs in the United States.
The program is voluntary, and employees are automatically enrolled in Basic Life Insurance upon hiring unless they choose to opt-out. Additional coverage options are available for employees who want more comprehensive protection for themselves and their families. FEGLI’s premiums are deducted directly from employees’ paychecks, making it easy and affordable for them to maintain coverage.
How FEGLI Works
FEGLI offers coverage through four primary components: Basic Life Insurance, Optional Life Insurance, Family Life Insurance, and the Accelerated Death Benefit. Each option serves a different purpose and provides varying levels of coverage.
Basic Life Insurance
Basic Life Insurance is the foundational coverage that all eligible federal employees receive upon enrollment. This policy provides a death benefit equal to one year’s salary, rounded to the nearest thousand dollars, plus an additional $2,000.
- Example: If you earn $50,000 per year, your Basic Life Insurance benefit would be $52,000.
- Premiums: The premiums for Basic Life Insurance are shared between the federal government and the employee. The cost of the premium is based on the employee’s age and deducted automatically from each paycheck.
Optional Life Insurance
Federal employees can supplement their Basic Life Insurance with Optional Life Insurance. There are three options under this category:
- Option A: Provides additional coverage of $10,000.
- Option B: Offers coverage of up to 5 times your salary. Employees can select coverage ranging from one to five times their annual salary.
- Option C: Covers family members. Employees can purchase coverage for their spouse and children, with varying amounts for each. Spouse coverage ranges from $5,000 to $25,000, and children’s coverage ranges from $2,500 to $12,500 per child.
Family Life Insurance
Family Life Insurance allows employees to purchase life insurance for their spouse and children. This coverage is an affordable way to provide financial protection to your loved ones if something happens to you.
- Spouse Coverage: Ranges from $5,000 to $25,000.
- Child Coverage: Ranges from $2,500 to $12,500 per child, depending on the number of children covered.
Family Life Insurance is available only to federal employees who are also enrolled in Basic Life Insurance. The premiums for Family Life Insurance are deducted from the employee’s paycheck.
Accelerated Death Benefit
The Accelerated Death Benefit allows employees diagnosed with a terminal illness to access a portion of their death benefit before passing. If you are diagnosed with a terminal illness and have a life expectancy of 9 months or less, you may request up to 75% of your death benefit in advance, depending on the policy’s specifics. This option can provide financial relief during the final stages of life and help cover medical expenses, hospice care, or other end-of-life costs.
Premiums and Cost of FEGLI
Premiums for Federal Employee Life Insurance are deducted directly from employees’ paychecks. The cost of the premiums depends on several factors, including:
- Basic Life Insurance: Premiums are shared between the federal government and the employee, with rates based on the employee’s age.
- Optional Life Insurance: Premiums are based on the amount of coverage selected, the employee’s age, and whether the employee opts for Option A, B, or C.
- Family Life Insurance: The premiums for family members’ coverage are based on the employee’s age and the level of coverage selected.
While the premiums for Basic Life Insurance are relatively affordable, employees should carefully consider the cost of Optional Life Insurance and Family Life Insurance, especially if they are looking to increase their coverage.
Eligibility for FEGLI
Federal Employee Life Insurance is available to:
- Current Federal Employees: All full-time, part-time, and seasonal employees of the federal government.
- Federal Retirees: Federal retirees who are enrolled in FEGLI may continue their coverage into retirement under specific conditions.
- Family Members: Family members of federal employees, including spouses and dependent children, may be eligible for coverage under the Family Life Insurance program.
Automatic Enrollment and Opt-Out
New federal employees are automatically enrolled in Basic Life Insurance, which is the core coverage provided by FEGLI. If an employee does not wish to participate, they can opt out during the initial enrollment period. Additionally, employees may adjust or increase their coverage during an annual open season or in response to qualifying life events (e.g., marriage, birth of a child).
FEGLI for Retirees
Federal retirees are eligible to continue their FEGLI coverage into retirement, but there are specific rules and conditions. If you retire from federal service, you can keep your Basic Life Insurance and some or all of your Optional Life Insurance, depending on how long you were enrolled in the program prior to retirement.
Reduced Coverage for Retirees: Retirees who continue their Basic Life Insurance into retirement will see a reduction in their coverage by 2% each month after they turn 65. However, they will continue to pay premiums for the coverage.
Understanding the Different FEGLI Coverage Components
Federal Employee Life Insurance (FEGLI) is a robust program designed to provide life insurance protection for federal employees, retirees, and their families. It offers various types of coverage to ensure that federal employees can tailor their insurance to suit their individual needs. To make the best decision about your life insurance needs, it’s important to understand the specifics of each available option. Below we’ll further break down the key components of FEGLI, including additional considerations to help you understand its true value.
Basic Life Insurance Coverage
Basic Life Insurance is the core component of the FEGLI program, providing standard coverage for all federal employees. As noted earlier, this plan offers a death benefit equal to one year’s salary, rounded to the nearest thousand dollars, plus $2,000. However, it’s important to understand that the amount you are covered for depends on your pay grade and the amount of salary you report to your federal employer. In addition, federal employees do not pay the full premium for Basic Life Insurance. The federal government covers two-thirds of the premium costs, leaving employees responsible for one-third.
- Cost-effectiveness: The fact that the government pays a significant portion of the premium makes Basic Life Insurance highly cost-effective, especially for those under the age of 45.
- Automatic Enrollment: Most federal employees are automatically enrolled in Basic Life Insurance unless they opt-out during their initial enrollment period. As such, it is an ideal default option for federal employees who don’t want to actively choose their coverage but still desire life insurance protection.
Optional Life Insurance (A, B, C)
For those seeking additional coverage beyond the Basic Life Insurance, FEGLI offers Optional Life Insurance in three distinct options:
- Option A: An additional $10,000 of coverage, which provides a relatively simple way to increase your coverage without overcomplicating your policy.
- Option B: Provides a more significant coverage increase. You can choose coverage equal to 1 to 5 times your salary. This option allows you to select an amount that works best for your financial situation. The higher the coverage amount, the higher the premium, but it offers the opportunity for comprehensive financial protection. Many federal employees choose this option if they feel that their Basic Life Insurance isn’t enough to support their family’s needs in the event of their death.
- Option C: Covers your family members, providing life insurance for your spouse and children. This option includes coverage for your spouse (ranging from $5,000 to $25,000) and your children (ranging from $2,500 to $12,500 per child). Option C ensures that your family will also be financially protected in case of your death, offering peace of mind for those looking to secure their loved ones’ futures.
Family Life Insurance
Family Life Insurance is a beneficial feature of the FEGLI program that allows employees to extend life insurance coverage to their spouse and children. This coverage is offered through Option C of the Optional Life Insurance, but it deserves its own focus because of its unique advantages.
- Affordable Protection for Your Loved Ones: By purchasing coverage for your spouse and children, you ensure that your family members will have financial support in the event of your untimely death. The benefit is especially helpful in covering funeral expenses, outstanding debts, or other immediate financial needs during a difficult time.
- Cost and Coverage Flexibility: Family Life Insurance allows employees to select the exact coverage they need for their spouse and children, offering flexibility that can meet the varying needs of different families.
Accelerated Death Benefit
The Accelerated Death Benefit is a key feature of FEGLI that allows policyholders diagnosed with a terminal illness to access a portion of their death benefit before they pass. This benefit can be a vital financial lifeline for individuals who are facing end-of-life challenges and need financial assistance to cover medical expenses, hospice care, or other needs.
- Eligibility: To qualify for this benefit, you must be diagnosed with a terminal illness and have a life expectancy of 9 months or less. Upon qualification, you can request up to 75% of your death benefit in advance.
- Early Access to Funds: The accelerated benefit gives you access to funds at a time when you need it the most, ensuring that your final months are spent in comfort and without financial strain. This option also ensures that your family will receive the remainder of your death benefit upon your passing.
Maximizing Your FEGLI Benefits
Federal Employee Life Insurance is not just about having life insurance coverage; it’s about ensuring that you choose the right options that meet your unique needs and life circumstances. The key to maximizing your FEGLI benefits lies in assessing your coverage options and adjusting them as your life changes. Here are a few important considerations to help you make the most of your life insurance:
Regularly Review Your Coverage
As your life circumstances change, so should your life insurance coverage. If you experience any significant life events such as marriage, divorce, birth or adoption of a child, or purchasing a home, consider reviewing your FEGLI options. Adding or increasing coverage may be necessary to ensure that your loved ones are fully protected.
Plan for Retirement
Federal employees who are nearing retirement should consider how their FEGLI coverage will be affected. While you can continue Basic Life Insurance into retirement, it will reduce by 2% each month once you turn 65. To avoid a potential coverage gap in retirement, consider purchasing additional life insurance through other means, such as private insurance, or through a third-party insurer.
Take Advantage of Open Seasons
FEGLI offers open seasons at specific intervals that allow you to make changes to your coverage, such as enrolling in Optional Life Insurance or increasing your coverage. Pay attention to these open seasons so that you can adjust your coverage based on your evolving needs without the restrictions of qualifying events.
Eligibility for Federal Employee Life Insurance
Federal employees, retirees, and their family members are eligible to participate in the FEGLI program. Here are the specific groups who are eligible:
- Federal Employees: This includes all full-time, part-time, and seasonal federal employees. Employees are automatically enrolled in Basic Life Insurance unless they opt out.
- Federal Retirees: Federal retirees can keep their Basic Life Insurance and some Optional Life Insurance coverage into retirement. However, retirees must have been enrolled in FEGLI for at least 5 years prior to retirement.
- Family Members: Family Life Insurance is available to federal employees who are enrolled in Basic Life Insurance and allows employees to provide coverage for their spouses and dependent children.
Cost of FEGLI Coverage
While FEGLI is one of the most affordable group life insurance options available, the cost can vary depending on several factors:
- Age: Premiums increase as you age, particularly for Optional Life Insurance. However, Basic Life Insurance premiums remain relatively stable until you reach 45, after which they increase.
- Coverage Level: The higher the coverage amount, the more expensive your premiums will be. If you opt for multiple multiples of your salary (e.g., Option B), your premiums will be higher.
- Type of Coverage: Family Life Insurance and additional Optional Life Insurance come with extra premiums that are the responsibility of the employee.
Also Read: How National Guardian Life Insurance Stands Out In The Market
Conclusion
Federal Employee Life Insurance (FEGLI) provides essential coverage for federal employees, retirees, and their families, ensuring financial security in the event of death. With various options to customize coverage, from Basic Life Insurance to Optional and Family Life Insurance, FEGLI allows federal employees to protect themselves and their loved ones according to their needs and budget.
Understanding your options, the costs, and the benefits of FEGLI can help you make the right decision for your life insurance needs. Be sure to review your coverage regularly and adjust it as your circumstances change to ensure that you have the protection you need, both during your working years and in retirement.
FAQs
Can I change my FEGLI coverage?
Yes, you can make changes to your FEGLI coverage during open seasons or if you experience a qualifying life event (e.g., marriage, birth of a child). Changes can include increasing or decreasing your coverage or enrolling in Family Life Insurance.
How much does FEGLI cost?
The cost of FEGLI premiums depends on your age, the amount of coverage you select, and whether you enroll in Optional or Family Life Insurance. Basic Life Insurance premiums are shared between the government and the employee, while premiums for Optional Life and Family Life Insurance are paid entirely by the employee.
Can I have other life insurance in addition to FEGLI?
Yes, you can have other life insurance policies in addition to FEGLI. Many employees choose to supplement their FEGLI coverage with private life insurance policies for additional protection.
What happens if I leave federal service?
If you leave federal service, you may be able to continue your FEGLI coverage into retirement if you meet the eligibility requirements. If you don’t retire, you may be able to convert your coverage to an individual policy.
Can I change my beneficiary under FEGLI?
Yes, you can change your beneficiary at any time by submitting a new designation to the Office of Personnel Management (OPM).
Do retirees still pay for FEGLI?
Yes, retirees continue to pay premiums for their coverage. However, retirees may see a reduction in their coverage amount for Basic Life Insurance once they turn 65.
How does the Accelerated Death Benefit work?
The Accelerated Death Benefit allows you to access up to 75% of your death benefit if diagnosed with a terminal illness. The amount you receive depends on the specifics of your policy and your life expectancy.