Fegli Term Life Insurance: Is It Worth The Cost?

Federal Employees' Group Life Insurance (FEGLI) is a program that provides federal employees with term life insurance benefits at a discounted group rate. Established in 1954, it is the largest group life insurance program in the world, covering over 4 million federal employees, retirees, and their family members. FEGLI offers basic life insurance coverage, which most new federal employees are automatically enrolled in, as well as three forms of optional insurance that can be elected. While FEGLI is affordable and convenient, it offers minimal protection, and those with more extensive coverage needs may need to supplement it with a private term life insurance policy.

FEGLI is a low-cost group term life insurance policy

Federal Employees' Group Life Insurance (FEGLI) is a low-cost group term life insurance policy for federal employees. Established on August 29, 1954, it is the largest group life insurance program in the world, covering over 4 million federal employees, retirees, and their family members.

FEGLI provides standard term life insurance benefits at a discounted group rate. It is exclusive to federal employees and offers basic coverage, making it ideal for those with minimal insurance needs. 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. Age does not affect the cost of basic insurance.

In addition to the basic coverage, there are three forms of optional insurance that employees can elect: Option A (standard optional insurance), Option B (additional optional), and Option C (family optional insurance). Employees must have basic insurance to elect any of the optional coverages. The employee pays the full cost of optional insurance, which depends on their age.

While FEGLI is affordable and easily accessible to federal employees, the coverage amount is typically low. It does not accumulate any cash value over time. As a result, breadwinners with multiple dependents may require additional coverage from a private term life insurance policy.

Overall, FEGLI is a low-cost group term life insurance policy that offers basic coverage for federal employees and can be supplemented with optional insurance plans.

It is exclusive to federal employees and their families

Federal Employees' Group Life Insurance (FEGLI) is a program that provides federal employees and their families with term life insurance benefits at a discounted group rate. It is the largest group life insurance program in the world, covering over 4 million federal employees, retirees, and their family members. FEGLI is exclusive to federal employees, meaning that only those who work for the government can sign up for a policy. This exclusivity is a key feature of the program, and it is not available to the general public.

Most federal employees are eligible for FEGLI coverage, and new employees are automatically enrolled in the Basic Life Insurance plan when they start working for the government. This basic coverage is shared between the employee and the government, with the employee paying 2/3 of the total cost and the government paying the remaining 1/3. The cost of basic insurance is not affected by the employee's age. In addition to the basic plan, there are three forms of optional insurance that employees can choose to add on to their coverage. These include Option A (standard optional insurance), Option B (additional optional), and Option C (family optional insurance). Employees must have the basic plan to elect any of the optional plans, and they must take specific action to add these options as enrollment is not automatic.

The FEGLI program is designed to be affordable for federal employees, with low or no-cost options. The rates are heavily subsidized by the government, making it a budget-friendly choice for those who need life insurance. While FEGLI provides convenience and ease of access, the coverage amount is typically lower than what is needed for comprehensive financial protection. As a result, some federal employees may choose to supplement their FEGLI coverage with a private term life insurance policy, especially if they have dependent beneficiaries.

FEGLI is a valuable benefit for federal employees and their families, offering peace of mind and financial protection at a discounted rate. The exclusivity of the program ensures that those who serve the government have access to affordable life insurance, although the coverage may not be sufficient for all individuals.

FEGLI coverage includes accidental death and dismemberment

The Federal Employees' Group Life Insurance (FEGLI) program offers a range of benefits to federal employees, including Accidental Death and Dismemberment (AD&D) coverage. This additional benefit provides financial support in the case of a covered accident resulting in death or dismemberment.

FEGLI AD&D coverage is designed to provide an extra layer of financial protection beyond the basic life insurance benefits. This coverage is included automatically with Basic FEGLI insurance at no additional cost. However, it can also be added to Option A, B, and C coverages for additional protection.

Key Features of AD&D Coverage

Accidental Death Benefits: If a covered employee dies as a direct result of an accident, the AD&D benefit pays an amount equal to the Basic insurance coverage in force at the time of the accident, in addition to the regular life insurance benefit. The death must occur within 90 days of the accident.

Dismemberment Benefits: If a covered employee loses a limb or their eyesight due to an accident, AD&D benefits provide a percentage of the insurance amount based on the severity of the injury. For instance, losing one limb or the sight in one eye might pay out 50% of the AD&D coverage amount, while losing multiple limbs or sight in both eyes could pay out 100%.

Eligibility and Claim Process

Understanding the eligibility criteria and claim process for FEGLI AD&D benefits is crucial for federal employees and their beneficiaries to access the necessary support.

Eligibility Criteria: Active federal employees enrolled in FEGLI Basic insurance are automatically eligible for AD&D coverage. Employees can also elect to enroll in Options A, B, and C to extend AD&D benefits to themselves and their family members. Retirees can choose to continue their FEGLI coverage, including AD&D benefits, under certain conditions. However, it is important to review the specific terms, as some benefits may change upon retirement.

Claim Process:

• Notify the employing agency or the Office of Personnel Management (OPM) about the accident as soon as possible to initiate the claim process.
• Collect and submit the necessary documentation, including an accident report, medical records, and proof of loss. For accidental death claims, a certified copy of the death certificate is required.
• Complete the appropriate FEGLI claim forms, available from the employing agency or OPM's website, ensuring all sections are accurately filled out.
• Submit the completed claim forms and supporting documentation to the Office of Federal Employees' Group Life Insurance (OFEGLI), the contractor that processes FEGLI claims.
• OFEGLI will review the submitted documents and determine the claim. If approved, the AD&D benefits will be paid out to the designated beneficiaries.

Strategies for Maximizing FEGLI AD&D Benefits

To make the most of FEGLI AD&D benefits, federal employees should consider the following:

• Regularly review and update coverage amounts to ensure they meet your current needs, especially after significant life changes.
• Keep beneficiary designations up-to-date, reviewing and updating them as necessary to reflect changes in family status or personal relationships.
• Understand policy exclusions and limitations, such as deaths resulting from self-inflicted injuries, war, or certain hazardous activities, as well as benefit limits for dismemberment claims.
• Utilize additional coverage options, such as Option A for enhanced AD&D coverage, Option B for additional life insurance, and Option C to extend coverage to spouses and eligible children.
• Leverage employer resources, including HR specialists and informational sessions, to gain valuable insights and assistance with enrollment, updates, and claims.
• Incorporate FEGLI AD&D benefits into your broader financial and estate planning, considering how they complement other policies and strategies.
• Maintain an emergency fund to cover immediate expenses, as there may be a delay in receiving the AD&D payout.

Employees are automatically enrolled in Basic Life Insurance unless waived

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 are eligible for FEGLI coverage, which provides group term life insurance.

As a new employee, you are automatically covered by Basic Life Insurance and your payroll office deducts premiums from your paycheck unless you waive the coverage. This basic insurance is effective on the first day you enter a pay and duty status. However, you have 31 days from your entry date to elect additional Optional Insurance or to waive coverage entirely. It is important to note that you must be enrolled in Basic Life Insurance to be eligible for Optional Insurance.

The cost of Basic Life Insurance is shared between the employee and the government, with the employee paying 2/3 of the total cost and the government contributing 1/3. Your age does not impact the cost of Basic Life Insurance. On the other hand, you pay the full cost of Optional Insurance, and the amount depends on your age.

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, the insurance coverage would be $36,000 plus $2,000, resulting in a total of $38,000. FEGLI insurance is a term insurance policy and does not accumulate any cash value.

In summary, employees in eligible positions are automatically enrolled in Basic Life Insurance under the FEGLI Program. However, they have the option to waive this coverage before the end of their first pay period.

There are three types of optional insurance available

Federal Employees' Group Life Insurance (FEGLI) is a term insurance policy that was established by the Federal Government on August 29, 1954. It is the largest group life insurance program in the world, covering over 4 million Federal employees and retirees, as well as many of their family members.

FEGLI insurance consists of Basic life insurance coverage and three options. Most employees are eligible for FEGLI coverage and are automatically enrolled in Basic Life Insurance unless they choose to waive it. Basic Life Insurance is effective on the first day an employee enters a pay and duty status. Employees are also strongly encouraged to submit the SF-2823 Designation of Beneficiary form.

In addition to the Basic coverage, there are three forms of Optional insurance that can be elected: Option A (standard optional insurance), Option B (additional optional), and Option C (family optional insurance). It is important to note that employees must have Basic insurance to elect any of the optional coverages. Unlike Basic, enrollment in Optional insurance is not automatic – employees must proactively elect these options.

• Option A provides $10,000 of additional coverage. While the premium rates are modest for younger employees, they increase over time.
• Option B allows employees to elect an amount equal to one, two, three, four, or five times their annual basic rate of pay, rounded up to the nearest $1,000.
• Option C provides coverage for an employee's spouse for up to five multiples of $5,000 and/or eligible children for up to five multiples of $2,500.

The cost of Basic Life 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. On the other hand, the employee pays the full cost of Optional insurance, and the cost depends on their age.

Frequently asked questions