Federal Employee Group Life Insurance
What is it?
The Federal Employees’ Group Life Insurance, or FEGLI, is the largest group life insurance program in the world. If you are a new federal employee, you are automatically covered by basic life insurance.
For basic coverage, your age does not affect the cost of insurance, and you share the cost with the government: You pay two-thirds of the total cost while the government pays one-third.
If you add any of the three forms of optional insurance, you pay the full cost and your age does determine the cost. The Office of Personnel Management goes into detail about each option available to you, and also includes a table to help you determine how much FEGLI will cost based on your age.
Basic coverage is pretty straightforward – it is equal to your base pay (rounded up) plus $2,000. For example, if you make $42,400/year, your basic coverage would be $45,000. Explanation: Base Pay = $42,400 Base Pay rounded up = $43,000 $43,000 + $2,000 = $45,000
In addition to the Basic, there are three forms of Optional insurance you can elect. 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.
Option A is the simplest form of optional life insurance. It provides your beneficiaries with a $10,000 death benefit in the event of your death.
Option B allows you to choose 1, 2, 3, 4, or 5 multiples of your base pay (rounded up). For example, if you make $50,000/year and elect to have 5 times your base pay, your Option B life insurance will pay $250,000 upon your death. The cost of Option B increases with your age. Below is a table outlining the cost:
|Age||Cost||Coverage||Cost per Pay Period|
|Under 35||$0.02 / thousand||$250,000||$5.00 / pay period|
|35 – 39||$0.03 / thousand||$250,000||$7.50 / pay period|
|40 – 44||$0.05 / thousand||$250,000||$12.50 / pay period|
|45 – 49||$0.08 / thousand||$250,000||$20.00 / pay period|
|50 – 54||$0.13 / thousand||$250,000||$32.50 / pay period|
|55 – 59||$0.23 / thousand||$250,000||$57.50 / pay period|
|60 – 64||$0.52 / thousand||$250,000||$130.00 / pay period|
|65 – 69||$0.62 / thousand||$250,000||$155.00 / pay period|
|70 – 74||$1.14 / thousand||$250,000||$285.00 / pay period|
|75 – 79||$1.80 / thousand||$250,000||$450.00 / pay period|
Option C is for families, providing coverage for your spouse and eligible dependent children. Under Option C, all of your eligible family members are automatically covered. The coverage amount is determined in units – each unit represents $5,000 for your spouse and $2,500 for each dependent child. For example, if you elect 3 units and your spouse dies, you would receive $15,000 (3 x $5,000). If one of your eligible dependent children dies, you would receive $7,500 (3 x $2,500). The number of multiples you elect applies to all of your eligible family members. In other words, you cannot elect 2 units for your spouse and 3 units for your children. Furthermore, a child’s eligibility for Option C benefits ends once he/she reaches age 22, unless he/she is incapable of self-support because of a mental or physical disability that existed before the child reached age 22.
How can we help?
Not exactly what you had in mind for life insurance? Us neither. Sometimes, FEGLI is not your most cost effective option for life insurance. Sometimes, it’s smarter to cancel your FEGLI and try an alternative insurance plan, one that has fixed benefits and fixed premiums.
The cost of your FEGLI goes up every five years—and that’s something probably no one has told you.
Sure it’s relatively inexpensive as a younger employee. But as you age, paying for federal life insurance can cut into your bottom line, and into your ability to save for a distinguished retirement.
The years when you need FEGLI the most, it can become prohibitively expensive. We can provide leads to commercial alternatives for you. We will analyze your pay and your current FEGLI benefits, and in short time, we will know what direction to lead you.
Contact one of our benefits specialists to learn about the right life insurance options for you and your family.
NOT SURE IF FEGLI IS RIGHT FOR YOU?
Download our FEGLI quiz and learn what insurance options are best for you when it comes to your federal retirement.