FEGLI and Life Insurance

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Basic Coverage

If a federal employee or retiree passes away, the Basic FEGLI coverage provides a death benefit to their beneficiary, roughly equivalent to the employee's annual basic pay—slightly rounded up. The benefit amount is calculated as the annual salary rounded to the nearest thousand, plus an additional $2,000. For example, a salary of $50,400 would result in a death benefit of $53,000.

Additionally, younger employees may receive enhanced coverage. For those under 35, the benefit amount is doubled (e.g., $53,000 becomes $106,000). Between the ages of 35 and 45, this extra coverage decreases by 10% per year, phasing out completely by age 45.

The cost of Basic FEGLI is shared, with employees covering two-thirds and the government paying the remaining one-third. New federal employees are automatically enrolled in Basic FEGLI, with premiums based solely on salary—not age or health. The current rate is $0.325 per $1,000 of coverage.

Unlike the Federal Employees Health Benefits (FEHB) program, which offers an annual “open season” for enrollment changes, FEGLI does not have a regular open season for adjustments or new elections. Employees can cancel coverage anytime using Form SF 2817, but reinstating coverage is more challenging. Re-enrollment typically requires a medical certification or a Qualifying Life Event (QLE), such as marriage, birth, or adoption. (Note: Retirement is not considered a QLE.)

Employees and retirees can access their FEGLI Basic benefits early in specific situations. These "living benefits" are available only if the individual has been diagnosed with a terminal illness, allowing them to use some or all of their death benefit during their lifetime.

Basic Coverage in Retirement

Federal employees who retire with at least five years of continuous FEGLI coverage have the option to maintain or reduce their benefits in retirement. Here’s how the options work:

1. Full Coverage (100%): Retirees can keep their full FEGLI Basic coverage, but this comes with a significant increase in premiums.
2. Reduced Coverage (50%): Retirees can choose to retain 50% of their original FEGLI Basic coverage, paying half the increased premium costs.
3. 75% Reduction Option: This unique choice allows retirees under age 65 to continue paying the same premium as when they were employed until they reach 65. After that, premiums stop entirely, and the coverage begins to gradually decrease by 2% per month until it reaches 25% of the original amount. At that point, the reduction stops, and the remaining 25% of coverage remains in place for life with no further costs.

Because of this gradual reduction feature and lifetime residual benefit, it’s often not advisable for retirees to completely drop FEGLI Basic coverage.

Optional Coverage

In addition to Basic FEGLI coverage, federal employees can choose from three types of optional insurance:

• Option A – Standard
• Option B – Additional
• Option C – Family

Enrollment in Basic FEGLI coverage is a prerequisite for accessing any of these optional coverages. Without Basic coverage, employees are not eligible for Options A, B, or C.

Unlike Basic FEGLI, new hires are not automatically enrolled in optional coverage. While employees can drop optional coverages at any time, re-enrolling or adding them later is more complex. Optional coverage can only be added under the following circumstances:

1. Rare FEGLI Open Seasons: The last one was in 2016.
2. Within 60 Days of a Qualifying Life Event (QLE): Examples include marriage or the birth/adoption of a child. (Note: Retiring from federal service is not considered a QLE.)
3. Passing a Physical Examination: Similar to evaluations required by private life insurance providers, this option determines if the applicant’s health meets the criteria for the desired coverage.

Cost Differences

FEGLI Basic coverage costs are shared, with employees paying two-thirds and the government covering the rest. However, employees bear the entire cost of any optional coverage they select (Options A, B, or C). [Click here for current FEGLI costs.]

Details of Optional Coverage

• Option A – Standard: Provides an additional $10,000 of coverage. Premiums are based on the employee's age, with younger employees paying less. Option A also includes accidental death and dismemberment (AD&D) coverage, which is discontinued upon retirement, similar to the AD&D benefit in Basic FEGLI.
• Option B – Additional: Offers additional coverage equal to the employee's salary multiplied by a factor of 1 to 5, rounded up to the nearest thousand, with an extra $1,000 added. Premiums increase with age.
• Option C – Family: Covers the lives of the employee’s spouse and eligible dependent children (up to age 22). Premiums also increase with age, and like Option B, this coverage can be reduced or maintained into retirement at age 65 and beyond.

These optional coverages provide flexibility for federal employees to tailor their life insurance to meet their personal and family needs, though careful consideration of costs and future eligibility requirements is essential.

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