FEGLI Turns 61
The Federal Employee’s Group Life Insurance Program (FEGLI) turns 61 this August. With over 4 million participants, FEGLI is the largest group insurance program in the world. With this big birthday coming up, a few things bear reminding:
- Also Read: 3 Reasons Certain Federal Employees Can Retire Years Earlier Than Their Peers Without Penalties
- Also Read: CSRS Retirement in 2024: Are You Making the Most of What This Classic Plan Has to Offer?
- Also Read: Roth IRA Basics for Beginners: What’s There to Learn?
Federal Employees can opt to participate in the basic FEGLI coverage plan and choose optional life insurance programs. In order to choose an optional FEGLI program you must have at least basic FEGLI insurance coverage through the FEGLI program.
The basic FEGLI program face value is equal to your annual salary, rounded up to the nearest $1000 plus an additional two thousand dollars. (If you made $50,600 per year, the face value of your policy would be $53,000.) You are responsible for 2/3 the cost of the FEGLI premium, the government foots the other 1/3 of the bill.
FEGLI Extra Benefit
Federal Employees under the age of 35 qualify for an “Extra Benefit.” This benefit doubles your coverage at no cost to you. Once you turn 35, the additional FEGLI coverage drops 10 percent each year until you reach 45. Employees can also choose to add an additional $10,000 to their face value or add an addition 1 to 5 times their annual salary to the face value of your policy through FEGLI Option B.
Additionally, retired federal employees may continue to receive coverage under the policy if they maintained basic FEGLI coverage for at least five consecutive years prior to the retirement date. There are several different options for retired employees including a 75 percent, 50 percent and no reduction options. If you choose either the 75 percent of 50 percent reduction plan; your FEGLI premium will decline (or disappear) as well.
Federal Employees reaching retirement age can choose to assign their FEGLI insurance to another party. Essentially, you could transfer ownership of the policy to any individual as part of your estate planning. This is a permanent decision; once you assign your FEGLI policy, it is done. You will not be able to change the beneficiary or cancel your policy.
Cashing Out You FEGLI
Retiring federal employees may also cash out their basic FEGLI is a doctor has diagnosed them with a terminal illness. You cannot exercise both special options, only one. Additionally, there are a few options for receiving your living benefit. You can have all of your benefits cashed out or you can select a partial benefit.
The Federal Employees Group Insurance Plan is widely considered one of the most stable federal benefits programs. Since its inception, the government has amended it nearly 60 times! While extensive amendments have been made over its 61-year history, the revisions help adjust to changing working circumstances. The last amendment too place in October of 2008 and added a clause that allowed coverage from some civilian employees working on military operations.
To learn more about specific FEGLI rules, regulations and amendments, check out the FEGLI handbook.
