FEGLI: What Every Federal Employee Needs to Know About Their Life Insurance Benefits

As a federal employee, you have access to a wide range of benefits, but one of the most important is your life insurance through the Federal Employees’ Group Life Insurance (FEGLI) program. This essential benefit offers peace of mind, knowing that your family is financially protected in case something unexpected happens. But what exactly is FEGLI, and how can you make sure you’re using it to your advantage? Let’s break it down.

What Is FEGLI?

FEGLI stands for Federal Employees’ Group Life Insurance, and it’s the largest group life insurance program in the world. Established in 1954, it provides term life insurance to over four million federal employees, retirees, and their families. The best part? As a federal employee, you are automatically enrolled in FEGLI Basic when you start working, ensuring that you have some level of coverage right from day one.

How Does FEGLI Work?

FEGLI offers different levels of coverage, and the cost depends on your salary and the options you choose. Here’s a simple breakdown of the types of coverage available:

1. Basic Coverage: This is automatic for most employees. The coverage amount is equal to your annual salary, rounded up to the next $1,000, plus an additional $2,000. The government pays one-third of the cost, and you cover the remaining two-thirds through payroll deductions.
2. Option A – Standard: This adds $10,000 of additional coverage on top of your Basic insurance.
3. Option B – Additional: You can choose to add one to five times your annual salary in extra life insurance. The more you choose, the higher the premium.
4. Option C – Family: This provides coverage for your spouse and eligible dependent children, giving you even more security for your loved ones.

You can elect additional coverage beyond the Basic plan, but it’s important to regularly evaluate how much life insurance you need. Do you have dependents relying on your income? How much debt would your family need to pay off if you weren’t there? These are essential questions to ask when considering your coverage levels.

Why Should You Care About FEGLI?

It’s easy to overlook your life insurance, especially if you’re young or healthy. But life is unpredictable, and having the right amount of coverage can make all the difference. FEGLI offers competitive rates, especially for Basic coverage, because the federal government helps pay for part of it. This means you can get significant protection at a lower cost than what you might find with private insurance.

Additionally, FEGLI is guaranteed issue when you first enroll as a new employee. This means you don’t have to go through a medical exam or answer health questions, making it accessible to employees who might have trouble qualifying for private insurance.

When Should You Reevaluate Your Coverage?

Life is constantly changing, and so are your insurance needs. Here are some key moments when you should take another look at your FEGLI coverage:

• Marriage or divorce: Getting married means more financial responsibilities, while divorce may require you to update your beneficiary designations.
• Having children: New parents often need more life insurance to cover the added expenses of raising a family.
• Buying a home: If you’ve taken on a mortgage, you’ll want to make sure your life insurance can cover that debt.
• Near retirement: As you get closer to retirement, it’s important to decide if you still need the same level of coverage. FEGLI rates go up significantly as you age, so you may want to reduce your coverage or explore other options.

FEGLI’s Open Season, which happens infrequently, is another opportunity to adjust your coverage. During Open Season, you can increase your coverage without needing a medical exam. Be sure to stay informed about the next Open Season so you don’t miss out on this chance.

Common FEGLI Mistakes to Avoid

Many federal employees are enrolled in FEGLI but make some common mistakes when managing their benefits. Here are a few pitfalls to avoid:

• Not updating beneficiaries: It’s crucial to keep your beneficiary designations up to date. If you forget to update this after a major life event, like a marriage or the birth of a child, your life insurance could go to the wrong person.
• Ignoring premium increases: FEGLI premiums increase as you age, especially for Options B and C. Keep an eye on your payroll deductions to make sure you’re comfortable with the costs.
• Overinsuring or underinsuring: While having life insurance is important, having too much coverage can waste money. On the other hand, too little coverage could leave your family in a difficult financial situation. Review your needs carefully.

How to Get the Most Out of FEGLI

To maximize your FEGLI benefits, it’s essential to take an active role in managing your coverage. Start by reviewing your current elections and ask yourself:

• Do I need more or less coverage based on my current life situation?
• Have I named the right beneficiaries, and are they up to date?
• Am I aware of how much my premiums will increase as I age?

If you’re not sure how to answer these questions, it might be time to talk to a financial professional who understands federal benefits. They can help you determine the right amount of coverage for your needs and guide you on how to make changes.

In Conclusion

FEGLI is a valuable benefit that offers federal employees affordable life insurance coverage. However, it’s up to you to make sure you’re taking full advantage of it. By regularly reviewing your coverage, understanding your options, and making informed decisions, you can ensure that your loved ones are financially protected—no matter what the future holds.

The Benefit Coordinators, can help you make informed choices and secure your future.

For more information on how to optimize your federal benefits, contact us today and schedule a consultation.