FEGLI – 75% Reduction Election

FEGLI: 75% Reduction

There are some dates or time periods that are important when discussing FEGLI. Although, we are clearly in the year 2014, I am still going to discuss dates prior in the event retirees or family members of retirees are a bit unclear about what is happening with the life insurance carried into retirement from the federal service.
If you retired prior to December 9, 1980, your BASIC FEGLI coverage (watch the video) begins to decrease by 2 percent of the face value every month starting with the second month after you reach the age of 65 or when you retire whichever comes later. The decrease in face value continues until it reaches 25 percent of the original face value. The coverage is free.
If you retired on after December 9, 1980, but prior to January 1, 1990, you would have elected a reduction of 75 percent, 50 percent or No Reduction. This is where we can be clearer so that there is a complete understanding of the elections with no confusion.
Let’s talk about what the 75 percent reduction election means. If you chose the 75 percent reduction during the periods outlined, your BASIC life insurance will begin to decrease in face value by 2 percent every month starting with the second month after you turn 65 or your retirement date, whichever is later. The decrease is ongoing until it reaches 25 percent of the original face value. This insurance coverage is free for you. You pay no premium.
I am a huge proponent of – it is easier by the inch than the mile. For that reason, I am going to discuss each percentage reduction election separately. I think we will have a better understanding if we do it that way. Agreed?