The Federal Employees’ Group Life Insurance (FEGLI) Program was established on August 29, 1954. It is the largest group life insurance program in the world insuring over 4 million Federal employees and retirees, as well as many of their family members.
Most employees are eligible for FEGLI coverage. FEGLI provides group term life insurance which does not build up any cash value or paid-up value.
It consists of Basic life insurance coverage and three options. You must have Basic insurance in order to elect any of the options. Unlike Basic, enrollment in Optional insurance is not automatic — you must take action to elect the options.
The cost of Basic insurance is shared between you and the Government. You pay 2/3 of the total cost and the Government pays 1/3. Your age does not affect the cost of Basic insurance.
You pay the full cost of Optional insurance, and the cost depends on your age.
The Office of Federal Employees’ Group Life Insurance (OFEGLI), which is a private entity that has a contract with the Federal Government, processes and pays claims under the FEGLI Program.
Did You Know?
Your Option B life insurance coverage cost will increase by 200% between the ages of 35 and 65. At a time (retirement) when your income will decrease your FEGLI cost will increase to the point of un-affordable.
With group Life Insurance a healthy non-smoker pays the same as a unhealthy smoker.
Not everyone needs the same plan. By looking into your own plan you could save thousands of dollars over your life time and still have coverage when you need it.
The Federal Employee Group Insurance is a group term insurance. In addition rates increase every 5 years in accordance with the certificate.
FEGLI basic coverage is the base annual income of the employee, rounded up to the nearest thousand dollars, and adding an additional two thousand dollars.
The cost of FEGLI is based on employee age and options selected. In addition, if the employee is a Postal Service employee the Post Office offers some life insurance free to the employee.
Option C is also known as Family coverage. Family coverage provides up to $25,000 of coverage for a spouse and $12,500 for each child.
An employee can increase FEGLI under two opportunities other than initial employment. They are; by providing medical evidence of the ability to be insurable and changing coverage in connection with a “qualifying life event”.
Although it is possible to continue FEGLI coverage into retirement. The monthly cost is extremely expensive and may not be affordable.
Getting Close To Retirement?
Speak with one of our Benefit Coordinators to ensure that you fully understand the cost and coverage off FEGLI in retirement. See what options are available to you. If you are eligible, you’ll have a decision to make. You can:
1) decide to keep the full value of the coverage you had on the day you retired
2) allow it to reduce to half its value, or
3) let it decline to 25 percent. If you choose the 25 percent option, the upside is that you won’t have to pay any more premiums when you reach age 65. The downside is that your coverage will decrease by 2 percent each month until it hits the 25 percent level. This amount will remain in effect until your death.
If you choose the 50 percent option, your annuity will be reduced by only 1 percentage point per month until it reaches half its value. The cost to you would be $0.965 per month per $1,000 of coverage until the month after you reach age 65. From that point forward, it would be $0.64 per $1,000.
If you choose the no reduction option, your premiums would be higher still. You’d pay $2.265 per month for each $1,000 of coverage until the month after you reach age 65 and $1.94 per $1,000 thereafter.