Federal Life Insurance Fegli: What Federal Employees Need to Know

Federal Life Insurance Fegli: Coverage and Options for Federal Employees

Federal Employees Group Life Insurance (FEGLI) is the group life insurance program for federal civilian employees. Managed by the Office of Personnel Management (OPM), FEGLI provides basic coverage and several optional plans. For many federal workers, FEGLI is the foundation of their financial protection, and understanding the tiers, costs, and enrollment rules helps ensure coverage fits long-term needs.

How FEGLI Basic Coverage Works

Basic FEGLI coverage is automatic for most new federal employees, unless they waive it in writing. The benefit equals your annual basic pay rounded to the next $1,000, plus $2,000. The government pays one-third of the premium for basic coverage; the employee pays the remaining two-thirds through payroll deductions. Basic coverage decreases by 25% for each five-year period after age 65, though it never drops below 25 percent of the original amount.

FEGLI Optional Plans: FELI, FECA, and FEGLI Option A, B, and C

FEGLI offers three optional insurance types, each with different structures and costs.

• Option A — Standard Insurance: Provides a fixed $10,000 payout. The employee pays the full premium, and rates are set by age.
• Option B — Additional Insurance: Allows coverage up to five times your basic pay, in $5,000 increments. Premiums increase every five years and can become expensive as you age.
• Option C — Family Insurance: Covers your spouse and dependent children. Coverage is $5,000 per spouse and $2,500 per child, with premiums based on your family status.

FEGLI Costs and Premium Structure

Because FEGLI is group insurance, premiums are generally lower than individual policies for the same coverage amount. However, optional plans use community-rated pricing that increases in steps. Option B premiums, for example, rise sharply in certain age brackets, often making it more cost-effective to reduce coverage over time. Basic coverage premiums are the most stable of the FEGLI plans.

Enrolling in or Changing FEGLI Coverage

New federal employees receive FEGLI enrollment information through their agency's human resources office. To adjust coverage, employees submit Standard Form 2818 (Change of Beneficiary Information) or SF 2823 (Request for Change in Optional FEGLI Insurance). Changes to Optional coverage typically take effect on the first day of the month following the agency's receipt of the form. Beneficiary designations should be reviewed after major life events, such as marriage, divorce, or the birth of a child.

FEGLI and Retirement Planning

For federal employees approaching retirement, FEGLI decisions affect both income protection and estate planning. Basic coverage continues into retirement, but the reduction at age 65 should be factored into financial projections. Some retirees choose to convert FEGLI to an individual policy or supplement it with private life insurance, especially if Option B premiums have grown substantially over a career.

Comparing FEGLI to Individual Life Insurance

FEGLI provides guaranteed issue coverage without a medical exam, which is a significant advantage. However, individual policies often offer level premiums, fixed death benefits, and more flexible riders. Federal employees should weigh the cost of keeping FEGLI optional coverage against the predictability and potentially lower long-term cost of a personal life insurance policy.

Who Manages FEGLI and Where to Get Help

The Office of Personnel Management administers the FEGLI program. Insurance claims and policy servicing are handled by the contractor selected by OPM. Federal employees with questions about their current FEGLI elections, premium deductions, or beneficiary forms can contact their agency's human resources office or the OPM retirement and insurance service centers.