As a federal employee, you are eligible for Federal Employees’ Group Life Insurance (FEGLI). This benefit consists of Basic life insurance protection and three Optional coverages. This article provides an overview of FEGLI and discusses the different coverage options you have while employed with the government.
What is FEGLI?
FEGLI is a group term life insurance program that covers federal employees and retirees, as well as many of their family members. As a term product, it does not accumulate any cash value. However, unlike most private term insurance, which maintains level premium payments and ends after a specified term of years, FEGLI premiums may increase over time and coverage can last your whole life.
Premiums are paid through payroll deductions with after-tax dollars, but all death benefits are paid out tax-free to your beneficiary. FEGLI proceeds are payable regardless of the cause or location of death.
The Office of Personnel Management (OPM) has a contract with the Metropolitan Life Insurance Company (MetLife) to provide this life insurance.
How to enroll?
All eligible full-time and part-time federal employees are automatically enrolled in Basic insurance unless coverage is waived. Initial enrollment does not require a medical exam or evidence of insurability. Coverage is effective on your first day of employment.
Enrollment in Optional insurance is not automatic. You have 60 days from joining the government to decide if you want to add an Optional plan.
You can also enroll in any plan or increase insurance coverage within 60 days after a qualifying life event such as marriage, divorce, death, and birth or adoption of a child; or during a FEGLI Open Season, which is not held often. The last open season was held in 2016 and the one before was in 2004.
Outside of these opportunities, you must undergo a physical exam to request coverage. FEGLI coverage can be canceled, waived, or reduced at any time.
What is FEGLI Basic?
Basic insurance is equal to your annual basic salary rounded up to the nearest $1,000 plus $2,000. This total is called the Basic Insurance Amount, or BIA. It is the lump sum amount that gets paid to your beneficiaries when you die. The minimum BIA for all employees is $10,000.
The cost of Basic insurance is shared between you and the government. You pay two-thirds of the premium cost for BIA and the government pays the other one-third. The employee’s portion equals 16 cents per $1,000 of coverage each pay date.
Example: David has an annual salary of $72,400. His basic pay rounded up to the nearest $1,000 is $73,000. After adding $2,000, his BIA equals $75,000. The cost to David is 75 times $0.16, which equals $12.00 per pay date. Since there are 26 pay dates per year, David’s annual cost for his BIA is 26 times $12.00, or $312.00.
Extra Basic Benefit
Basic insurance also provides an Extra Benefit to employees under age 45 at no additional cost. This Extra Benefit increases the amount of Basic insurance payable at the time of your death. To calculate the amount of the Extra Benefit, multiply your BIA by the appropriate age multiplication factor in the following table:
|Age at Death||Age Multiplication Factor|
|35 or Under||2.0|
|45 and Over||1.0|
Example: David dies at age 40. His BIA is $75,000. The age multiplication factor is 1.5. The amount of BIA payable is 1.5 times $75,000, or $112,500.
What are the FEGLI Optional plans?
There are three Optional coverages—Option A, Option B, and Option C. You must have Basic insurance in order to elect any of the Optional plans. You are responsible for the full cost of Optional insurance, and the cost for each option depends on your age, in five-year age brackets. When you have a birthday that moves you to another age group, your premium will increase in the first pay period that starts after your birthday.
Option A – Standard
Option A is often referred to as “Standard” insurance. This option provides a flat $10,000 in coverage. This policy is sometimes used to cover funeral or cremation costs and other end-of-life expenses.
Option B – Additional
Option B provides the opportunity to secure additional life insurance coverage at various multiples of your basic annual salary rounded up to the next $1,000. You may choose multiples of 1, 2, 3, 4, or 5.
Example: If David elected a multiple of 3 at his annual salary of $72,400, his death benefit payout would be $73,000 times 3, or $219,000. Note, there is no additional $2,000 included in Option B.
Option C – Family
Option C provides life insurance for your spouse and eligible dependent children. When you elect Option C coverage, all of your eligible family members are automatically covered. To be eligible, children must be unmarried and under the age of 22 or incapable of self-support if older than 22.
You may choose coverage in multiples of 1, 2, 3, 4, or 5. Each multiple is equal to $5,000 for a spouse and $2,500 for each eligible dependent child. The maximum amount is $25,000 for a spouse and $12,500 for children.
Accidental Death and Dismemberment Benefits
Accidental death and dismemberment (AD&D) coverage is included in Basic insurance and Option A insurance (if elected) at no additional cost. There is no AD&D benefit with Options B and C.
Accidental death and dismemberment benefits are payable when you sustain injuries by accidental means. Under Basic insurance, accidental death benefits are equal to your BIA, and accidental dismemberment benefits are equal to one-half of BIA for the loss of one limb or sight in one eye. If you lose two limbs or sight in both eyes, the benefit is equal to your full BIA. The same benefit ratio applies to the Option A coverage of $10,000.
Termination and Conversion of Insurance
When your FEGLI insurance terminates, except by waiver or cancellation, there is an automatic 31-day extension of insurance coverage without an added cost. During this temporary period, you are entitled to convert all or any part of your Basic and Optional insurance to an individual policy. A medical exam is not required to carry out the conversion. However, some health questions may be asked to determine whether you qualify for a lower premium.
We hope you enjoyed this blog post about FEGLI. In Part 2, we will explore FEGLI options in retirement. If you have any questions about federal benefits, personal finance, or retirement planning, connect with us. Here are some ways that we can help you:
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