Federal Employee Group Life Insurance
(FEGLI)
The Federal Employees’ Group Life Insurance (FEGLI) Program provides life insurance protection to eligible federal employees, retirees, and their families. For many federal employees, FEGLI is an important part of their overall financial and retirement plan—but it is important to understand what it provides and whether it provides enough coverage for your individual needs.
What Does FEGLI Provide?
- FEGLI offers several types of coverage:
- Basic Insurance: Provides coverage based primarily on your annual basic pay, with an additional amount added to the benefit.
- Option A – Standard: Provides an additional $10,000 of coverage.
- Option B – Additional: Allows you to purchase additional multiples of your basic annual pay.
- Option C – Family: Provides coverage for eligible family members, including your spouse and dependent children.
Is FEGLI Enough?
- One of the most important questions isn't simply "Do I have life insurance?" but rather:
- "Do I have enough life insurance to protect my family and accomplish my financial goals?"
- For a young federal employee with a family, life insurance can help replace income that would otherwise be lost if the employee dies prematurely.
- Some financial professionals use 20 times annual income as a general starting point when evaluating the amount of coverage a young family may need.
- For example:
- Annual income: $75,000
- 20 × annual income: $1.5 million
- A $1.5 million pool of capital could potentially provide significant ongoing income for a surviving spouse and family.
This illustrates why simply having FEGLI may not necessarily mean you have sufficient coverage.
Life Insurance as You Build Wealth
- The purpose of life insurance can change throughout your career.
- Early in your career:
- Protect your family's income.
- Provide financial security for your spouse and children.
- Help bridge the gap between your current assets and the wealth your family would need.
- Later in life:
- Help provide liquidity for your estate.
- Protect accumulated wealth.
- Potentially help address estate taxes and other expenses.
- Help preserve more of your wealth for your spouse and the next generation.
Is FEGLI the Best Option for Your Life Insurance Needs?
- FEGLI is a valuable benefit, but it may not always be the most cost-effective or appropriate life insurance solution for every federal employee.
- There are several factors worth considering:
- No medical underwriting: FEGLI generally does not require traditional medical underwriting when coverage is available under the applicable enrollment rules. If you are relatively healthy, however, individually underwritten life insurance may potentially offer more coverage for a lower premium.
- Limited death benefits: FEGLI has coverage limits. Depending on your income, family obligations and financial goals, the available coverage may not be enough to fully replace your income or protect your family's financial future.
- Increasing costs at retirement: Certain FEGLI coverage can become significantly more expensive as you age, potentially making it less attractive or affordable at the very time you may want continued protection.
- Your needs may change: The amount of coverage you need at age 35 may be very different from what you need at age 55 or 65.
Could an Outside Policy Be a Better Fit?
- Possibly. FEGLI doesn't have to be your only life insurance solution.
- Depending on your age, health, income, family situation and financial objectives, individually purchased life insurance may provide an alternative or supplement to FEGLI.
- Potential advantages may include:
- More coverage for your specific needs.
- Potentially lower premiums for individuals who qualify based on their health.
- Coverage that isn't tied to your federal employment.
- Different policy designs that may better fit your long-term financial objectives.
Compare Your Options
- Don't guess whether FEGLI is your best option—compare it.
- Use the FERS Consultants Life Insurance Quoting Software to see what coverage and pricing may be available from outside insurance providers.
- Our quoting tool can help you:
- Compare potential private life insurance options.
- See how premiums may compare with your current FEGLI costs.
- Explore different amounts of coverage.
- Determine whether an outside policy could potentially be a better fit for your needs.
Your FEGLI coverage is an important benefit. But it's worth finding out whether it's also your best option.
Understand Your FEGLI Coverage
FEGLI can be an important federal employee benefit, but having coverage and having enough coverage are two different things.
At FERS Consultants, we believe federal employees should understand how FEGLI fits into their overall retirement and estate-planning strategy.
Don't wait until retirement to discover a life insurance gap. Understand your benefits, protect your family, and maximize your retirement.
Life insurance costs, underwriting requirements, coverage availability, and tax treatment vary by policy and individual circumstances. Any comparison between FEGLI and private insurance should consider the specific policies and your personal situation.