Options for Federal Life Insurance While You Are Employed
The FEGLI (Federal Employee Group Life Insurance) program is, worldwide, the most extensive group life insurance program. It covers over 4,000,000 federal retirees, employees, as well as their family members. Several of those employees covered don’t entirely understand what they have in coverage and what options they have. They signed up the opportunities that seemed most efficient, and there is an emerging trend of people not re-examining their choice since their date of hire.
A Federal Employee who was hired while young possibly had a family member or someone depending on their income. Since that time there have been changes and in some cases that employee may not require as much life insurance if any at all. Here we will examine the four parts of FEGLI and the effects it may have while you are working.
FEGLI Basic
‘Basic’ is the first part of your life insurance. FEGLI Basic is your salary rounded up to the nearest 1,000 plus $2,000. As an example; if you earn $52,800 a year your coverage would then be rounded to the nearest thousand ($53,000); plus add on an additional $2,000. So, the essential coverage of death benefit for your salary would be $55,000.
This cost of the primary option is fifteen cents per $1,000 in coverage per pay period. It is worth noting that the price per 1,000 will not increase over time.
Some advisors are not familiar with Federal Life insurance program. They may advise people incorrectly to cancel this insurance because it “gets too expensive as you get older.” This could be true of some parts of FEGLI, but not necessarily true of your primary options.
You can quickly reference your leave and earnings statements to see what you’re paying for your Basic coverage. Sometimes FEGLI Basic will be shown as the FEGLI Regular deduction on your Leave and Earnings statement.
You get what is called the Extra Benefit if you are thirty-five years old or younger. Extra Benefit will double your primary coverage for no additional cost. Beginning at age thirty-five it declines by ten percent per year until at the age of forty-five the Extra Benefit will end, and all that remains is Basic coverage.
Option A
An optional flat $10,000 additional coverage. Based on your age, the cost will continue to go up every five years. The coverage remains an even $10,000. This coverage is something you can either elect or decline.
Option B
FEGLI Option B is an optional coverage that must be elected. It is an additional one to five times your basic pay.
Based on your age, the cost will go up every five years. The price per 1,000 is competitive in the private insurance marketplace until you reach age fifty-five.
You will want to pay attention to what you’re paying for Option B. As previously stated, the cost goes up every five years, but how much will they increase?
The increases are mild until age fifty. In the chart below it is shown that the cost rises by about 50% between the age of fifty and fifty-five. If you take a look at the increase at age sixty, your costs may be more than double.
It is recommended that you examine your leave and earnings statement. Check for a deduction that says “FEGLI Optional” or if you have a second FEGLI deduction with a high premium.
Age Group Bi-weekly Holding per $1,000 of Insurance Monthly Withholding per $1,000 of Insurance
| Age Group | Bi-weekly Holding per $1,000 of Insurance | Monthly Withholding per $1,000 of Insurance |
| Under age 35 | 0.03 | 0.065 |
| Age 35-39 | 0.04 | 0.087 |
| Age 40-44 | 0.06 | 0.130 |
| Age 45-49 | 0.09 | 0.195 |
| Age 50-54 | 0.14 | 0.303 |
| Age 55-59 | 0.28 | 0.607 |
| Age 60-64 | 0.60 | 1.300 |
| Age 65-69 | 0.72 | 1.56 |
| Age 70-74 | 1.20 | 2.60 |
| Age 75-79 | 1.80 | 3.90 |
| Age 80 and over | 2.40 | 5.20 |
Option C
For family coverage we will take a look at FEGLI Option C.
This option is for coverage where you may elect coverage for your spouse and/or eligible children. You may choose in increments of five-thousand dollars for your spouse and twenty-five hundred dollars for your children. Up to five multiples may be elected for each family member. This cost is based on the age of the employee and increases every five years.
How can I tell how much coverage I have?
Reviewing your SF-50 may be the best place to find this information. Your recent Standard Form 50 Notice of Personnel action will have a detailed description under “Box 27 FEGLI” what coverages and at what multiples you currently have. It is also possible to reference your leave and earnings statement. With most agencies that will not give you the coverages, but usually the costs.
Can my coverage be increased?
There are only a few instances in which you can enroll and increase your coverage. Outside of open enrollment season, eligible employees can improve or enroll in coverage by having a physical exam with a Qualifying Life Event. Open season for FEGLI life insurance is extremely rare, and none are scheduled currently. OPM’s website and your agency will announce when there is a life insurance open season is coming up. The most recent FEGLI open seasons took place in 2004 and 1999.
Is it possible for me to cancel my coverage?
At any time of the year, you can cancel some or all of your FEGLI. You can keep some coverage but cancel; the other. For instance, you would be able to cancel Option B but keep your Basic.
Another option would be to reduce your coverage. If Option B‘s5 times your salary has unexpectedly become too expensive, you would be able to cut it to one to 4 times your wage. However, you may not be able to re-acquire that same coverage once you have elected to reduce it. It is essential to be sure that it is something you want to do before taking action.
Is buying outside life insurance an option instead?
This is a possibility, but you may want to consider a few things beforehand. There are various kinds of life insurance, and an outside plan requires underwriting. An individual plan could save you money if you are healthy. But meeting with a life insurance professional who is familiar with the single life insurance marketplace as well as the Federal Life Program. Unless the new life insurance program has approved you, do not cancel or reduce the FEGLI.
A Federal Employee who was hired while young possibly had a family member or someone depending on their income. Since that time there have been changes and in some cases that employee may not require as much life insurance, if any at all.
Here we will examine the 4 parts of FEGLI and the affects it may have while you are working.
FEGLI Basic
‘Basic’ is the first part of your life insurance. FEGLI Basic is your salary rounded up to the nearest 1,000 plus $2,000. As an example; if you earn $52,800 a year your coverage would then be rounded to the nearest thousand ($53,000); plus add on an additional $2,000. So, the basic coverage death benefit for your salary would be $55,000.
This cost of the basic option is fifteen cents per $1,000 in coverage per pay period. It is absolutely worth noting that the cost per 1,000 will not increase over time.
There are some advisors who are not familiar with Federal Life insurance program. They mayadvise people incorrectly to cancel this insurance because it “gets too expensive as you get older”. This could be true of some parts of FEGLI, but not necessarily true of your basic options.
You can easily reference your leave and earnings statements in order to see what you’re paying for your Basic coverage. Sometimes FEGLI Basic will be shown as FEGLI Regular deduction on your Leave and Earnings statement.
You get what is called the Extra Benefit if you are thirty-five years old or younger. Your basic coverage will be doubled by Extra Benefit for no additional cost. Beginning at age thirty-five it declines by ten percent per year until at the age of forty-five the Extra Benefit will end and all that remains is Basic coverage.
Option A
An optional flat $10,000 additional coverage. Based on your age, the cost will continue to go up every 5 years. The coverage remains an even $10,000. This coverage is something you can either elect or decline.
Option B
FEGLI Option B is an optional coverage that must be elected. It is an additional one to five times your basic pay. Based on your age, the cost will go up every five years. The cost per 1,000 is competitive in the private insurance marketplace until you reach age fifty-five.
You will want to pay attention to what you’re paying for Option B. As previously stated, the cost goes up every five years, but how much will they increase?
The increases are mild until age fifty. In the chart below it is shown that the cost rises by about 50% between the age of fifty and fifty-five. If you take a look at the increase at age sixty, your costs may be more than double.
It is recommended that you examine your leave and earnings statement. Check for a deduction that says “FEGLI Optional” or if you have a second FEGLI deduction with a high premium.
