What You Should Know & What You Can Do with Your FEGLI Program

When it comes to federal benefits there are a lot of acronyms and it can be a little confusing to understand what each one means and how it impacts your benefits.  One such acronym is FEGLI which stands for Federal Employees’ Group Life Insurance.  It is important for any adult to consider life insurance because you cannot anticipate the unexpected and you do not want to leave your spouse or family stranded without a safety net.

Federal life insurance is unique and a bit confusing which means that many federal employees have no idea how their life insurance actually works.  With FEGLI, the government pays a portion of the cost of your life insurance.  Every eligible federal employee is automatically enrolled in FEGLI’s basic insurance program unless you waive your coverage.  Your coverage is based on your annual income which is then rounded to the nearest $1,000 and then added to that is $2,000 which is called the BIA or Basic Insurance Amount.  The government pays 1/3 of the total cost of your federal life insurance.  Generally speaking, FEGLI functions similarly to non-federal life insurance but there is one difference, as noted by the United States Office of Personnel Management, “Unlike many other employer-sponsored life insurance programs, FEGLI coverage can be continued into retirement. The FEGLI retirement benefit is prefunded by premium costs so that after age 65 (or at retirement, if later) some coverage can be continued by retirees at no cost. The net effect of the level premium and post-65 benefit is that younger enrollees’ premiums cover the cost of coverage they currently have, and also pre-funds a portion of the costs related to coverage they will have later in their careers and in retirement. Since the government contributes a share of the Basic premium, the employee share remains relatively competitive with the cost of private term insurance.”

There are 3 types of options insurance if you choose to enroll in optional insurance: Option A-Standard, Option B-Additional, and Option C-Family.  It is challenging for anyone to determine how much life insurance they need.  Fortunately, if you work with an experienced federal retirement planner they can assist you in calculating your FEGLI needs.  Life insurance needs calculator can be found on www.lifehappens.org.