Federal Retiree Life Insurance: Application Process Simplified

Life insurance can be a crucial tool to help your loved ones recover financially in the event of your unexpected death. The Federal Employees' Group Life Insurance (FEGLI) Program is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, as well as their family members. It was established in 1954 and offers basic life insurance coverage and three optional coverages: Option A-Standard, Option B-Additional, and Option C-Family. To be eligible for FEGLI, you must meet specific requirements, such as being enrolled in the program when you retire and not having converted your life insurance coverage to an individual policy. Additionally, you must have been insured for the five years immediately preceding your retirement or since your first opportunity to enroll. Understanding the different options available and the steps to apply is essential for ensuring that your loved ones are financially protected in the event of your passing.

Enrolling in the Federal Employees' Group Life Insurance (FEGLI) program

The Federal Employees' Group Life Insurance (FEGLI) Program is the largest group life insurance program in the world, covering over 4 million Federal employees, retirees, and their family members. Most employees in eligible positions are automatically enrolled in Basic Life Insurance unless they choose to waive it. Basic Life Insurance is effective on the first day of pay and duty status.

To enrol in FEGLI, new employees have 31 days from the date of their appointment to elect additional Optional Insurance or to waive coverage entirely. Employees must be enrolled in Basic Life Insurance to elect Optional Insurance. The completed Life Insurance Election Form, SF-2817, must be submitted to the servicing Human Resources Office. Employees are also encouraged to submit the SF-2823 Designation of Beneficiary form.

Basic Life Insurance coverage is calculated based on your annual basic rate of pay, rounded up to the nearest $1,000, plus $2,000. For example, if your annual salary is $35,260, your insurance coverage would be $38,000 ($36,000 plus $2,000). 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. Your age does not affect the cost of Basic Insurance.

There are three types of Optional Insurance available: Option A (Standard), Option B (Additional), and Option C (Family). Option A provides an additional $10,000 of coverage. Option B offers coverage in multiples of one to five of your annual basic pay (rounded up to the next $1,000). Option C provides coverage for your spouse and eligible dependent children, with each multiple equalling $5,000 for your spouse and $2,500 for each eligible child. You pay the full cost of Optional Insurance, and the price depends on your age.

Maintaining basic coverage

If you are retiring under the Minimum Retirement Age (MRA) plus 10 provision of FERS, it is important to note that your health care and life insurance coverage will be suspended until your annuity starts, even if it is postponed.

The amount of basic coverage you carry into retirement is based on your salary on the day you retire. When your insurance terminates, your employing office must provide you with a Notice of Conversion Privilege (SF 2819). You won't need to undergo a medical examination for conversion, but you may be asked some health questions to determine your eligibility for a lower premium. You can choose your insurance company from a list of providers approved by the Office of Personnel Management.

Upon retirement, you will need to make your coverage choices on form SF 2818, Continuation of Life Insurance Coverage. The Office of Personnel Management (OPM) will deduct FEGLI premiums from your retirement benefit each month. It is important to note that life insurance premium rates increase when you retire, and you won't be able to increase your coverage after retirement.

Cancelling or reducing coverage

You can cancel or reduce your Federal Employees' Group Life Insurance (FEGLI) coverage at any time, even after retirement. However, once you have cancelled or reduced your coverage as a retiree, you cannot increase it again later. Any reduction or cancellation of coverage after you retire is permanent.

To cancel or reduce your coverage, you must complete the Life Insurance Election Form, SF 2817, and submit it to your Benefits Contact. If you want to reduce your coverage, sign only for the coverage you want to keep. You cannot elect coverage that you don't already have. If you want to cancel all life insurance coverage, sign in Box 5.

There is one exception to this rule: if you have assigned your life insurance by transferring ownership to another person or company, you cannot cancel or reduce your Basic, Option A, or Option B coverage.

If you cancel your Basic life insurance, you are also cancelling all your Optional insurance. If you elected the 50% reduction or no reduction schedule upon retirement for your Basic life insurance, you may cancel this additional coverage at any time. You may also reduce or cancel the amount of your Option B insurance, or cancel any or all other Optional life insurance coverages you may have.

You may wish to cancel your coverage because a potential need that you were insuring against no longer exists, for example, if your children have finished college or you have paid off your mortgage. You may also decide to take out insurance through another source that better fits your needs, such as a policy that builds cash value, which is not available through FEGLI.

A reduction or cancellation is effective the first of the month after the month in which the Office of Personnel Management (OPM) receives your request. You will not receive a refund of any premiums paid through the end of the month in which OPM receives your request.

Designating a beneficiary

Understanding Beneficiaries:

A beneficiary is an individual, entity, or organization that you choose to receive the benefits from your life insurance policy after your passing. They are a fundamental part of your retirement plan, providing purpose and direction for your legacy.

Types of Beneficiaries:

There are two main types of beneficiaries:

• Primary Beneficiary: This is the person named as the first recipient of the death benefit. They are entitled to receive the insurance payout upon your demise.
• Contingent Beneficiary: Also known as the secondary beneficiary, this person is named as the 'second in line' to receive the death benefit should the primary beneficiary predecease you or is otherwise unable to receive the benefit.

Choosing a Beneficiary:

When selecting a beneficiary, consider your financial dependents and those who will require financial support after your passing. Your marital status can also influence this decision. If you have a complex family situation, you may need to give it extra thought.

To designate a beneficiary for Federal Employee Group Life Insurance (FEGLI), you need to complete and submit the appropriate form:

• For FEGLI, use the SF 2823 Designation of Beneficiary form.
• For Unpaid Compensation of a Deceased Civilian Employee, use the SF-1152 form.
• For CSRS/FERS, use the SF-3102 form.

You can submit the completed form through the RABAS Portal or mail it to the relevant address.

Important Considerations:

• Keep your beneficiary designations up to date. If your marital status changes or your beneficiary's address changes, be sure to complete a new form.
• Two individuals must witness your signature on the form, and they should provide their addresses.
• Witnesses cannot be named as beneficiaries on the same form.
• You can change your beneficiary designation at any time unless there is a court order in effect.
• If you have assigned your insurance, only the assignee has the right to designate a beneficiary.

Order of Precedence:

If you do not designate a beneficiary, the benefits will be distributed according to the standard order of precedence set by law. The order is as follows:

• Widow or widower
• Children (in equal shares)
• Parents (in equal shares)
• Appointed executor or administrator of your estate
• Next of kin under the laws of your state of residence at the time of your death

Remember, designating a beneficiary is a vital step in ensuring that your federal retiree life insurance benefits are distributed according to your wishes. Take the time to complete the necessary forms and keep them updated to provide peace of mind for you and your loved ones.

Understanding the cost

The cost of federal retiree life insurance is dependent on several factors, including the type of coverage, age, salary, and the number of dependents. Here is a detailed breakdown of the costs associated with federal retiree life insurance:

Basic Coverage:

The Federal Employees' Group Life Insurance (FEGLI) program offers basic life insurance coverage for retirees. The cost of basic coverage is based on a level rate per thousand dollars of coverage. This means that the premium remains the same for each enrollee, regardless of age, although there may be periodic adjustments based on claims experience. For example, as of October 1, 2021, the rate for basic coverage was $0.3467 per $1,000 of coverage per month. This rate applies to both active employees and retirees until they reach the age of 65.

It is important to note that to carry basic coverage into retirement, individuals must meet certain requirements. These include being enrolled in FEGLI for the five years preceding retirement or since the first opportunity to enroll, and not converting the coverage to an individual policy.

Optional Coverage:

In addition to basic coverage, FEGLI offers three types of optional coverage: Option A-Standard, Option B-Additional, and Option C-Family. The cost of each option varies and is based on the amount of coverage and the age of the enrollee.

Option A-Standard:

This option provides a $10,000 death benefit. The cost of this coverage increases with age. For example, for individuals aged 50-54, the premium is $2.17 per month, while for those aged 60-64, it is $13 per month. Premiums are waived for individuals aged 65 and above.

Option B-Additional:

Option B provides coverage of 1-5 times the annual salary of the enrollee, rounded up to the next $1,000. The cost of this coverage also increases with age. For example, for individuals aged 50-54, the premium is $0.217 per $1,000 of coverage per month, while for those aged 60-64, it is $0.867 per $1,000 of coverage per month.

Option C-Family:

Option C provides coverage for the enrollee's spouse and unmarried dependent children. It offers 1-5 multiples of coverage, with each multiple providing $5,000 for the spouse and $2,500 for each eligible child. Similar to the other options, the cost of this coverage is based on age. For individuals aged 50-54, the premium is $1.80 per multiple per month, while for those aged 60-64, it is $5.27 per multiple per month.

Reduction Options:

When retiring, individuals have the option to choose from different reduction schedules for their basic coverage:

75% reduction: The coverage reduces by 2% per month after turning 65 (or at retirement if already over 65) until it reaches 25% of its original value. Premiums are $0.3467 per $1,000 of coverage per month until the reduction begins, after which no further premiums are paid.

50% reduction: The coverage reduces by 1% per month after turning 65 until it reaches 50% of its original value. Premiums are $0.3467 per $1,000 of coverage per month until the reduction begins, after which a reduced premium of $0.75 per $1,000 of coverage per month is paid.

No reduction: Individuals can choose to maintain their basic coverage without any reductions. This option is the most expensive, with premiums of $2.25 per $1,000 of coverage per month for those under 65, and $2.5967 per $1,000 of coverage per month for those 65 and older.

It is important to note that the costs provided in the examples above may change over time, and individuals should refer to the most recent rates published by the Office of Personnel Management (OPM) to determine the current costs of federal retiree life insurance. Additionally, while federal life insurance is an excellent benefit, individuals should carefully consider their own circumstances, financial situation, and the cost of coverage when deciding whether to enrol or continue coverage into retirement.

Frequently asked questions