Federal Employees Group Life Insurance plan, also known as FEGLI; is a group life insurance plan that provides all federal government employees a life insurance plan at great prices for basic insurance coverage. This Plan is established whenever you begin your career with the federal government. A lot of federal employees hear about this coverage from their employee benefits specialist and then go back on their own and make their selections.You can determine what works best for you by using the FEGLI calculator and then contacting an independent agent who understands FEGLI.
Basic FEGLI is an affordably priced plan with suitable coverage, however, for optional coverage use the FEGLI calculator to understand how the premiums will increase every five years beginning at age 35 and the monthly payment becomes cost prohibitive starting around age 50.
FEGLI Basic Coverage and AD&D
Your Basic insurance policy also consists of coverage for accidental death and dismemberment (AD&D). AD&D pays the entire amount of your Basic insurance coverage if you die or lose two or more body parts – for example, a hand, foot, eye, etc. – and one-half that amount for the loss of one part. If you die, this payment is in addition to the amount of your Basic coverage. Even though AD&D coverage doesn’t decrease while you are employed, it ends when you retire.
If you refused the Basic coverage when you were hired, you still have three opportunities to enroll at a later date: during an open season (which is rare), after providing medical proof of your insurability, or when you experience a qualifying life event, such a marriage or the birth of a child.
FEGLI Option A
Option A allows any federal employee who enrolled in the Basic Coverage to purchase an additional $10,000 in coverage. Although the government picks up the tab for a third of the cost of Basic Coverage, with Option A you are on your own. The premiums for Option A coverage are based on your age and start at $0.30 each pay period for each $1,000 in coverage and max out at $6.00 per $1,000 in coverage if you are 60 or older. FEGLI option A is no longer available after retirement.
Enrolling in Option A is not automatic like enrolling in Basic. You will need to submit a completed Form 2817 to your personnel office within 31 days of being appointed to a position that offers FEGLI coverage.
FEGLI Option B
Option B also provides another method of beefing up your life insurance coverage. If you are covered by Basic Insurance, Option B enables you to choose additional amounts of insurance coverage that are equal to one, two, three, four or a maximum of five times your rate of basic pay and then rounded to the next higher $1,000. This added coverage can be a significant advantage and provide peace of mind if you want to offer a considerable sum of money to your surviving family members or anticipate the probability of uninsured medical costs, funeral expenses, college tuition, and unpaid debts.
Like Option A, the cost of Option B coverage is paid by the employee without assistance from the federal government.
When you finally retire, you can choose to elect a full reduction in your Option B multiples or no reduction at all. If you chose the full reduction, your insurance premiums will stop but your coverage will decrease by 2 percentage points per month for 50 months until it reaches zero. That reduction will start either at the second month after your 65th birthday or when you retire, whichever is later.
FEGLI Option C (Family Optional Insurance)
If you are covered under FEGLI Basic Insurance, Option C allows you to purchase insurance coverage for your spouse and any unmarried dependent children under age 22, or, if age 22 or over, incapable of self-support before reaching age 22. Eligible dependent children include your natural children, adopted children, stepchildren, but only if they live with you in a regular parent-child relationship, recognized natural children and foster children, but only if they live with you in a regular parent-child relationship.
If you decide to enroll in Option C, the amount of insurance coverage can be up to five multiples of $5,000 for a spouse and $2,500 for each eligible child. The cost of bi-weekly premiums is based on your age and the multiples of coverage you elect. It begins at $0.22 per multiple of coverage at age 35 and rises to $6.60 per multiple at age 80 or older. FEGLI Option C is not available after you retire.
The FEGLI Calculator
The Office of Personnel Management (OPM) provides the FEGLI calculator on their website that will allow federal employees to calculate their life insurance rates for Basic, Option A, Option B, and Option C coverage. The calculator is updated regularly as rates change and will always be a useful tool when considering life insurance rates provided by the federal government.
The 3 Top Facts the FEGLI Calculator Reveals
Not only does the FEGLI Calculator provide accurate rates for your Basic coverage and any optional coverage you select, it allows you to do some planning for the future. Here are the three top facts the FEGLI calculator reveals.
1. FEGLI Basic coverage which is paid partly by your employer is a bargain that should not be passed up.
2. The rates for FEGLI Option B increase exponentially at ages 50, 55, 60, 65, and 70. FEGLI Option B is affordable to until age 49, but at age 50 the employee should consider a Term Life insurance policy from an independent agent who is familiar with the Federal Employee Group Life Insurance Program.
3. Optional coverage is well (optional). You can keep your FEGLI Basic coverage and drop the option B part with the increasing cost. The FEGLI calculator breaks these out for you so you can make an informed decision about the Option B coverage that is paid by the employee.
The following is one of our virtual life insurance policyholders. This case study shows the various coverages Grace Chi selected and her actual rates. Grace was able to save money by using private insurance.
Virtual Policyholder Number 2
Grace wants life insurance in the amount of at least 5 times her salary but wants to reduce the rising cost. We recommend Grace pick up a 30 year, fully underwritten term life insurance policy with an $800,000 face amount, keep FEGLI basic and drop FEGLI option B.
The result: Over the next 17 years Grace will save over $26,000 in life insurance costs and have a fixed cost of $179.22 monthly for a 30-year term life insurance policy with a face amount of $800,000 through age 80.
Grace Chi, Program Analyst
Department of Veteran’s Affairs, Washington, DC
Current Series, Grade/Step : GS- 0343-13/8
Plans to retire at age 67
Health concerns: None. She doesn’t smoke.
Current FEGLI Participation: FEGLI Basic
Pays per pay period: $18.30
FEGLI option A: 0
FEGLI option B: 5 times salary $66.00 $600,000
FEGLI option C: 0