Federal Employees Group Life Insurance

The Federal Employees Group Life Insurance (FEGLI) program is the largest group life insurance program in the world, covering nearly four million active and retired Federal employees. FEGLI was created in 1954.

The plan offers four levels of coverage: Basic and three Options (A, B, and C):

• Basic coverage is calculated at current salary, rounded upward to the next $1,000, plus an additional $2,000. It also offers an "Extra Benefit" equal to an additional 100% of coverage if an employee dies at age 35 or younger, decreasing by a factor of 10% each year until age 45 at which time the Extra Benefit ceases to exist. Further it offers AD&D coverage equal to 100% of coverage upon death (above and beyond regular and Extra Benefit coverage) and 50% of coverage for loss of a hand, foot, or sight in one eye (but no more than 100% of coverage in any one incident).
• Option A is a flat $10,000 of additional coverage. AD&D coverage is offered at $10,000 upon death and $5,000 for loss of a hand, foot, or sight in one eye (but no more than $10,000 of coverage in any one incident); this is in addition to regular coverage.
• Option B offers coverage multiples of 1, 2, 3, 4, or 5 times current salary, rounded upward to the next $1,000. AD&D coverage is not available under this option.
• Option C covers spouses and family, and offers multiples of 1, 2, 3, 4, or 5 times $5,000 for spouse and $2,500 for each child. AD&D coverage is not available under this option.

New employees are automatically enrolled in Basic coverage, and may within the first 60 days of employment obtain Option coverage, with guaranteed coverage regardless of prior health history (an employee must be enrolled in Basic coverage to request Option coverage). Otherwise, employees may enroll only if 1) an open season for enrollment is offered (unlike the Federal Employees Health Benefit program, seasons are not annual and are actually quite rare; only eight have ever been offered in the program's history and none since 2004), 2) by providing proof of insurability (after one year has passed from declining coverage, but Option C is unavailable under this scenario), or 3) at a qualifying "life event" (marriage, child birth, or adoption are the most common).

Basic coverage is paid 2/3 by the employee and 1/3 by the government (except for United States Postal Service employees who pay zero for their Basic coverage) and is a flat rate for all employees (and retirees under age 65) regardless of age. Option coverage is paid 100 percent by the employee and the rates increase with age (the rates are calculated in five-year age bands, as one passes into a higher-age band the rates increase; notably after age 50 the rates increase significantly).

An employee leaving the Federal Government for reasons other than retirement loses all coverage and none of the premiums are repaid. However, if the employee returns, then s/he can sign up again for coverage.

In order to take coverage into retirement, the employee must have been covered for the five years preceding (or, if less than five years, since the earliest opportunity to enroll); the rule cannot be waived.^[1] Also for continuous coverage, the employee must retire on an immediate annuity (if the employee takes a deferred annuity, coverage is suspended -- but not terminated --- from the date of separation until the annuity begins). At retirement, the employee must decide how much coverage to take into retirement (an employee cannot increase coverage in retirement except as noted below):

• Under Basic, the employee may choose 75% Reduction, 50% Reduction, or No Reduction. Under 75% Reduction, for retirees under age 65 the coverage remains in the full amount the employee had at retirement until age 65. At age 65 (or upon retirement if the employee retires after age 65) coverage will reduce by 2% per month beginning the second full month after an employee's 65th birthday, until reaching 25% of original coverage, then remaining at that level for life. Under this option premiums must be paid until age 65 (or upon retirement if the employee retires after age 65), after which coverage is free for life. The 50% Reduction option reduces coverage by 1% per month until reaching 50% of original coverage, while the No Reduction option does not reduce coverage, but both of these options require additional premiums for as long as those options are chosen; under these options a retiree has only two other choices: reduce to 75% Reduction or discontinue Basic coverage.
• Under Option A, the benefit will reduce at age 65 (or upon retirement if the employee retires after age 65) by 2% per month ($200/month) until reaching 25% of coverage ($2,500), then remaining at that level for life. Premiums must be paid until age 65 after which coverage is free for life. There is no other alternative except to discontinue Option A coverage.
• Under both Option B and Option C, the employee may choose either Full Reduction or No Reduction. However, the employee may choose to leave some multiples at No Reduction and others at Full Reduction, and if the employee retired before age 65 get a second chance to change between the options for any and all multiples. Under Full reduction, for retirees under age 65 the coverage remains in the full amount until age 65. At age 65 (or upon retirement if the employee retires after age 65) coverage will reduce by 2% per month beginning the second full month after his/her 65th birthday, until reaching zero. Under this option premiums must be paid until age 65 (or upon retirement if the employee retires after age 65), after which coverage is free for life. The No Reduction option does not reduce coverage but requires additional premiums for as long as the option is chosen; otherwise the only alternative is to discontinue Option B and/or Option C coverage.

All AD&D coverage ceases at retirement.

An employee may assign coverage (except under Option C) to a third party, only notification is required.

At death, benefits are paid as follows:^[2]

• If coverage was assigned, to the beneficiary(ies) designated by the assignee(s), or if none to the assignee(s) directly.
• If not assigned, under the terms of any court order designating payment.
• If not assigned and no court order, to the beneficiary(ies) designated by the insured.
• Otherwise, under a "standard order of precedence"^[3], as follows:
  • To the widow or widower,
  • To any children in equal shares (or to their descendants),
  • To the parents or any surviving parent,
  • To the executor or administrator of the estate, or
  • To the next of kin as determined under the laws of the state where the insured lived.

Under Option C, benefits are paid to the insured, but if the insured dies before benefits are paid, they are paid to those who may receive benefits under the insured's Basic coverage (excluding any beneficiary(ies) from an assignee since Option C coverage cannot be assigned).

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