As an employee of the Federal Government, you likely have access to life insurance coverage through the Federal Employees' Group Life Insurance, or FEGLI, program. This plan, established over 60 years ago, is estimated to protect more than 4 million federal employees and retirees, along with a large number of their eligible family members.
Most federal employees are eligible for coverage through FEGLI. Through the program, the employee’s portion of the premium is deducted directly from his or her paycheck by the payroll office.
The Good
One of the biggest advantages of FEGLI coverage is that you have several options in determining how much coverage you can obtain. First, there is the option to just receive "Basic" insurance that is equal to your salary, rounded up to the next even thousand, plus another $2,000.
On top of that, however, there are three additional options where an employee can add more coverage to the Basic amount. These options include a flat additional $10,000, or different multiples based on either salary amount or family members (i.e., spouse and children).
Another nice feature about the FEGLI insurance coverage is the fact that once you are eligible for this program, there is no medical examination required to be accepted for the life insurance policy. Therefore, if you (or your eligible family members) have an adverse medical condition, you will still be able to obtain the life insurance policy. This can be a great way for someone who is not able to qualify for individual life insurance coverage to obtain the life insurance protection that they need.
The Bad….and the Ugly
Although there are many advantages to participating in the FEGLI program, there are also a few factors to be mindful of as well. First, two primary types of life insurance are offered in the marketplace – term and permanent. Term life provides only death benefit protection, whereas permanent offers both a death benefit, as well as a cash value component. The insurance that is offered through FEGLI is term. Therefore, the only benefit here is death benefit coverage, with no cash value or savings plan combined within.
Also, even though term life insurance is oftentimes more affordable in the early years, these policies will become much more costly as an insured increases in age. This is usually the case with FEGLI participants. Here, the price increases can be quite high for those who are in their 50s and 60s – so it is important to be aware that you may see your premium double, or even triple, as time goes on.
About June Kirby
June Kirby has almost two decades of experience serving as a federal employee retirement trainer, strategy specialist, and advocate. Based on her extensive knowledge, she offers consultation on a host of federal retirement benefits and TSP maximization strategies. Ms. Kirby tirelessly travels the country to make herself available to hundreds of deserving, yet under-served federal and postal employees, federal agencies, unions, and organizations.
Simply Secure Financial and June Kirby are not affiliated with or endorsed by the U.S. Government, any governmental agency, or any federal benefits programs discussed herein. Your personal specialist at Simply Secure Financial may offer insurance services, and as such, is a licensed insurance professional with training and experience in federal employee benefits.