FEGLI comes with two types of coverage – Basic and Optional. Whether the employee is covered under CSRS (the Civil Service Retirement System) or FERS (Federal Employees Retirement System) the coverage is identical for FEGLI. While Basic FEGLI coverage is automatically issued in the employee’s name as soon as they start working, the employee will likely want to elect one of more of the three optional coverage choices that are available. The type and amount of any optional coverage that you select and which federal retirement benefits you choose to keep will be based on whichever best fit your needs and as you age and your family circumstances change your selections may also change. Both full time and part time federal employees can participate in the FEGLI program, however, it is voluntary and the plan can be cancelled if you are able to find cheaper life insurance coverage or if don’t require insurance at that moment.
The Basic Insurance Coverage
The Basic Insurance Coverage under FEGLI is automatically issued in the employee’s name as soon as service begins, unless the employee waives the coverage, and acts as immediate protection for the employee’s beneficiaries in the event of death.
• The total amount for this federal employee life insurance is a sum of the employee’s annual basic pay rounded up to the next $1000 plus an additional $2000.
• Two thirds of the costs of this insurance is paid by the employee while the rest is paid by the Government.
o U.S. Postal Service pays 100% of the Basic FEGLI costs for Postal employees. Any Optional Insurance selected is paid for by the employee.
The Optional Insurance Coverage
Apart from the Basic plan, there are three optional federal employee life insurance plans that you can elect under FEGLI. However, you must have basic insurance in the first place to go for any of these options. The cost of this coverage depends upon your age and is payable by you alone without any contribution by the government.
Here are the three types of optional coverage you can go for:
Option A – Standard Optional Insurance
• This coverage amounts to a total of $10,000.
• The cost is decided as per your age, and specific age bands are defined which spell out the costs to each participant.
Option B – Additional Optional Insurance
• While Option A comes with a fixed amount of coverage, option B comes in five multiples (1, 2, 3, 4 or 5) of your annual pay (after being rounded up to the nearest next $1000).
• The cost for this insurance too depends upon the age bands defined at 35, 40, 45, 50, 55, 60, 65, and 70.
o Option B coverage is attractive especially for younger employees. As you age, however, you should always compare your FEGLI costs against other, private, term life insurance options. A huge potential cost savings can be realized if you are already 45 or older or if you intend to protect your family with life insurance beyond 50 years of age. We highly recommend the use of a FEGLI Calculator that can give you an accurate description of your FEGLI rates compared to other term life insurance options.