Life Insurance For Retired Government Employees: What's Covered?

Life insurance is a crucial aspect of financial planning, and it's important to understand the options available to retired government employees. In the United States, retired federal employees can often maintain their life insurance coverage, including basic and optional insurance, upon meeting certain conditions. This is facilitated through programs such as the Federal Employees Group Life Insurance (FEGLI) and exclusive offerings from organisations like WAEPA. Additionally, retired government employees also have healthcare options, including the Federal Employee Health Benefits (FEHB) program, which can be used alongside Medicare.

Federal Employees Group Life Insurance (FEGLI)

FEGLI provides group term life insurance, which means it does not accumulate cash value over time. The program consists of Basic life insurance coverage, which most new Federal employees are automatically enrolled in, and three forms of Optional insurance that employees can choose to add on. The Basic insurance cost is shared between the employee and the Government, with the employee paying 2/3 of the total cost. The Optional insurance cost is paid in full by the employee and depends on their age.

To be eligible for FEGLI coverage, employees must enroll in the Basic life insurance program and then have the option to choose from three types of Optional insurance within 31 days of becoming eligible. Employees can also enroll or increase their FEGLI coverage outside of the annual Federal Benefit Open Season by taking a physical exam or experiencing a Qualifying Life Event.

Upon retirement, Federal employees can keep their Basic life insurance coverage if they meet certain conditions, such as having been enrolled in the program for the preceding five years and starting their annuity payments within 30 days. Similarly, retirees can keep their Optional life insurance benefits if they are eligible to continue their Basic coverage and had Optional coverage for the preceding five years. It is important to note that retirees cannot increase their life insurance coverage after retirement, and any reduction or cancellation of coverage is permanent.

In the unfortunate event of an employee's death or dismemberment, or the death of an eligible family member, the FEGLI Program provides benefits to the designated beneficiary or surviving family members. These benefits are paid in addition to any other applicable compensation, such as workers' compensation or Social Security benefits.

Retaining basic life insurance coverage

If you're retiring under the Minimum Retirement Age (MRA) plus 10 provision of FERS, your health care and life insurance coverage will be suspended until your annuity starts, even if it is postponed. It's important to note that you cannot increase your coverage after you retire, and any reduction or cancellation of coverage after retirement is permanent.

The Federal Government established the FEGLI Program on August 29, 1954, and it is now the largest group life insurance program in the world, covering over 4 million federal employees, retirees, and their family members. FEGLI provides group term life insurance, which means it does not build up any cash value or paid-up value. The cost of basic insurance is shared between the employee and the government, with the employee paying 2/3 of the total cost and the government paying 1/3.

In most cases, if you are a new federal employee, you are automatically covered by basic life insurance, and your premiums are deducted from your paycheck unless you waive the coverage. However, it is important to note that you must specifically elect any of the three optional insurance coverages available if you want them in addition to the basic coverage.

Optional life insurance benefits

Federal Employees Group Life Insurance (FEGLI) is a group term life insurance program that offers basic life insurance coverage and three optional coverages. As a new federal employee, you are automatically covered by basic life insurance, and premiums are deducted from your paycheck unless you waive the coverage.

The three optional coverages are:

• Option A-Standard: The amount of insurance is $10,000 at retirement, but it may have been higher if you retired before October 30, 1998. This coverage reduces by 2% per month or $200, beginning the second month after your 65th birthday or your retirement date, whichever is later, until it reaches 25% of the face value, or $2,500. You can choose to cancel this coverage after you turn 65, and no premiums are required after that age.
• Option B-Additional: The amount of insurance is from one to five times an employee's salary at the time of retirement. Annuitants with Option B coverage can choose between "Full Reduction" and "No Reduction" before turning 65. With the full reduction, coverage reduces by 2% of the face value per month for 50 months and then ends. With no reduction, you continue to pay premiums after age 65, and you can later cancel the coverage and switch to the full reduction option.
• Option C-Family: The amount of insurance is from one to five multiples, with each multiple equalling $5,000. Annuitants with Option C coverage can choose between "Full Reduction" and "No Reduction" before turning 65. With the full reduction, coverage reduces by 2% of the face value per month for 50 months and then ends. With no reduction, you continue to pay premiums, and you can later cancel the coverage and switch to the full reduction option, but you cannot re-enroll.

To be eligible to continue your optional life insurance benefits after retirement, you must meet the following conditions:

• You are eligible to continue your basic coverage.
• You had optional life insurance for the five years immediately preceding retirement or for the full periods of federal service when coverage was available (if it was less than five years).

You can cancel or decrease your coverage at any time, but you cannot increase it after you retire. Any reduction or cancellation of coverage after retirement is permanent.

Cancelling or decreasing coverage

Retired government employees in the US can cancel or decrease their life insurance coverage at any time. However, it is important to note that once the coverage is reduced or cancelled, it cannot be increased again later. Any reduction or cancellation of coverage after retirement is permanent.

If you are a retired government employee with basic life insurance under the Federal Employees' Group Life Insurance (FEGLI) program, you can cancel or decrease your coverage at any time. FEGLI is a group term life insurance program that provides coverage for most federal employees. As a retired government employee, you can also choose to convert your FEGLI coverage to an individual policy if you no longer want to continue it. However, you must apply for the individual policy and pay the first premium within 31 days of retiring to avoid a gap in insurance protection. The cost of the individual policy will depend on the dollar amount of insurance you choose, your age, and your risk category, which is based on factors such as your medical condition and habits.

If you have optional life insurance benefits, such as Option A-Standard, Option B-Additional, or Option C-Family, you can also cancel or decrease your coverage at any time. For example, if you have Option B-Additional coverage, you can choose to reduce the number of multiples you are insured for. If you decide to cancel or decrease your optional life insurance coverage, you will need to fill out the appropriate forms, such as the SF 2818 form for Continuation of Life Insurance Coverage.

It is important to carefully consider your needs and financial situation before cancelling or decreasing your life insurance coverage. Life insurance can provide important financial protection for your loved ones in the event of your death.

Eligibility requirements

To be eligible to continue receiving life insurance benefits after retirement, retired government employees must meet several requirements. These conditions vary depending on the type of insurance coverage and the specific circumstances of the retiree. Here are the detailed eligibility requirements for retired government employees to maintain their life insurance coverage:

Basic Life Insurance Coverage:

• Enrolled in Basic Life Insurance: To be eligible to continue basic life insurance coverage, retirees must have been enrolled in the Federal Employees' Group Life Insurance (FEGLI) program when they retired. This is a fundamental requirement, ensuring that individuals were already part of the program before retirement.
• No Conversion to Individual Policy: Retirees must not have converted their life insurance coverage to an individual policy. This means that they should still be part of the group insurance plan and have not opted for a separate, individual insurance plan.
• Five Years of Coverage: Individuals must have had life insurance coverage for the five years immediately preceding retirement. If coverage was available for less than five years, then it must have been in place for the full period when coverage was offered.
• Timely Annuity Payments: Annuity payments, which are periodic payments made to the insured individual, should start within 30 days of retirement. This condition ensures that the retiree is receiving their benefits in a timely manner.
• Minimum Retirement Age: For those retiring under the Minimum Retirement Age (MRA) plus 10 provision of FERS, health care and life insurance coverage may be temporarily suspended until the annuity starts, even if the annuity commencement is postponed.

Optional Life Insurance Coverage:

• Eligibility for Basic Coverage: To be eligible for optional life insurance benefits, retirees must first meet the eligibility criteria for continuing their basic coverage, as mentioned above.
• Five Years of Optional Coverage: Similar to basic coverage, individuals must have had optional life insurance coverage for the five years immediately preceding retirement. If coverage was available for a shorter period, then it must have been maintained for the full duration when offered.

It is important to note that eligibility requirements for continuing life insurance coverage cannot be waived. If a retired government employee does not meet these eligibility criteria, they may have the opportunity to convert to an individual life insurance policy, as per the guidelines of the Office of Personnel Management (OPM).

Frequently asked questions