What is FEGLI & How Does it Work?

FEGLI stands for the Federal Employees' Group Life Insurance program. It is a group life insurance program offered to federal government employees, including civil service employees, postal workers, and other eligible federal personnel. FEGLI provides life insurance coverage to employees and their eligible family members.

Key features of the FEGLI program include:

1. Multiple Coverage Options: FEGLI offers several coverage options, including Basic, Optional, and Family coverage. Employees can choose the level of coverage that best suits their needs and can also select additional Optional coverage if desired.

2. Basic Coverage: Most federal employees are automatically enrolled in the Basic coverage, which provides a base level of life insurance. The cost of Basic coverage is shared between the employee and the government.

3. Optional Coverage: Employees have the option to purchase additional life insurance coverage through the Optional coverage. This allows individuals to increase their life insurance benefits beyond the Basic coverage. Optional coverage is available at different multiples of an employee's annual salary. Options A,B & C are detailed below.

4. Family Coverage: FEGLI also provides life insurance coverage for an employee's family members, including spouse and eligible dependent children. Employees can choose the level of Family coverage they wish to purchase.

5. Accidental Death and Dismemberment (AD&D) Coverage: FEGLI includes an AD&D feature that provides additional benefits in the event of accidental death or certain types of injuries resulting in dismemberment.

Cost Sharing: Postal workers get this coverage at no charge. All other branches pay $0.15 per $1,000 of coverage. That means if you have $61,000 of Basic Coverage, you will see a deduction of $9.15 per pay period for that insurance. You can calculate your Basic Coverage by taking your annual Base Pay - round it up to the nearest thousand and then add $2,000. So for example let's assume your annual Base Pay is $58,300. Round up to the nearest thousand and you get $59,000. Now add $2,000 and you get your Total Basic Coverage of $61,000. As you get pay raises and cost of living adjustments, your Basic Coverage will also increase.

FEGLI's Best Kept Secret - The Final Expense Benefit: If an employee retires prior to age 65, their Basic Life Insurance will remain in effect until the employee reaches age 65. After that their Basic Life Insurance benefit will begin to reduce by 2% each month until the benefit reaches 25% of it's original amount. For example, if your Total Basic Coverage is $61,000 - at age 65 it will begin to reduce by 2% over the next 3 years and 2 months until it reaches $15,250, when you are age 68. Many federal employees ae unaware that their basic coverage stays in effect for life! Since many do not know about it, it goes unclaimed. If you wish to claim your basic benefit, inform your executor and your beneficiaries.

What is FEGLI & How Does it Work?

The Extra Benefit: This is a bonus for being under age 45. If you die prior to age 45, your beneficiaries will get a multiple of your Basic Coverage. So let's use our chart and figure out a hypothetical example. Let's say Brenda has $61,000 of Basic Life coverage. Brenda dies tragically at age 37. According to the chart her beneficiaries would receive her Basic Life insurance benefit x the Extra Life multiplier of 1.8 which would give her beneficiaries a $109,800 payout ($61,000 x 1.8 = $109,800). Remember this "Extra Benefit" does not cost the employee any additional premium, it is a bonus.

Living Benefits: Beginning in 1995 the Living Benefits Act was passed to help employees diagnosed with terminal illness. If diagnosed and it is determined the employee has 9 months or fewer to live, the employee can access their full Basic Coverage and any Extra Benefit (if applicable) at the time of the diagnosis. This allows the employee the opportunity to spend their final days with family and loved ones without being concerned about finances.

Open Seasons: Periodically, FEGLI conducts open seasons during which employees can make changes to their coverage levels without the need for a qualifying life event.

Portability and Conversion: FEGLI coverage may be portable upon retirement, allowing retirees to maintain their coverage at their own expense. Additionally, employees who leave federal service may have the option to convert their coverage to an individual policy.

It's important for federal employees to review their FEGLI coverage options and costs to ensure that their life insurance needs are adequately met. FEGLI is a valuable benefit for federal employees and provides financial protection for their families in case of unexpected events. If you would like a free life insurance quote from the private sector, it would be our honor to provide that to you free of charge. Fill out the quote form below to get started.

Click to enlarge FEGLI Extra Benefit chart

Optional Insurance

Options A,B & C add different benefits to your package. Employees can add these when they are hired. Additionally these options can be added or increased during an "open season" or following a qualifying event such as a marriage, divorce or birth of a child. You can cancel or reduce these benefits at any time. Here are the options:

OPTION A: Provides a $10,000 death benefit to beneficiaries if the employee dies. The cost of this option does increase incrementally every 5 years. This option is often called a burial policy.

OPTION B: A very popular option, allows employees to take up to five times their base pay as an additional life insurance benefit, if they are willing to pay for it. The cost of this additional insurance will increase as it is based on the age of the covered employee. The cost remains reasonable until it begins rising sharply at age 50 (See the chart "FEGLI 'OPTION B' RATES" below). The cost of this life insurance has to go up because it is based on one thing - age. If you seek out life insurance in the private sector you will likely find more affordable options that offer more benefits and a level premium, meaning the cost doesn't rise each year. You may have to take a medical exam to qualify for preferred rates.

OPTION C: This is family coverage, the employee is the beneficiary who will be paid a benefit if one of his family members (the insured) passes away. This Family Coverage is offered in units of 1 - 5. One unit is either a $5,000 spouse benefit or a $2,500 dependent child benefit. (Dependent children are biological, foster or adopted children living with you under a parent/child relationship, unmarried and under the age of 22). EX: If an employee takes 5 units of FamilyCoverage they will get $25,000 coverage on their spouse and $12,500 of coverage for each dependent child. NOTE: You cannot separate children and spouse coverage. If your child grows up and leaves home, you cannot simply drop their coverage and keep your spouse. Family coverage is a light switch - on or off - not customizable.

Click FEGLI Option B chart to enlarge

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