FEGLI stands for Federal Employees' Group Life Insurance. It's FEGLI open season this month (September 2016), for the first time in over a decade …
One of the benefits offered to federal employees is a term life insurance plan: the Federal Employees' Group Life Insurance, or FEGLI for short (the government loves acronyms).
Employees pay for the majority of the life insurance through payroll deductions, and is opt-out for new employees. In other words, you get FEGLI unless you say you don't want it.)
FEGLI Open Season: A relatively rare opportunity
It's straightforward for an employee to reduce or eliminate FEGLI coverage. Just submit a form and done, any time.
Getting back in, or increasing coverage, isn't quite so convenient. Doing so requires:
- A qualifying life event, like marriage, divorce, death of spouse, or acquiring a child, either naturally or by adoption;
- Presenting evidence of insurability, which involves a medical exam;
- Waiting for an open season announcement by the Office of Personnel Management.
While it’s easy to reduce or cancel coverage with just a simple form, increasing it isn’t so flexible. Major life changes, like a divorce, can expose just how limiting those rules can be, especially when financial stability and future planning suddenly take center stage.
That’s why having experienced legal guidance matters. Knutson + Casey understands that divorce isn’t just about signing papers—it’s about reshaping your entire life, including how you protect it. Whether it’s identifying which benefits may need updating, untangling insurance policies, or ensuring your interests are safeguarded in post-divorce adjustments, their family law expertise makes navigating these complexities far less overwhelming.
Open seasons are few and far between. So … When is the next FEGLI open season?
The last FEGLI open season was twelve years ago (as of 2016). So unless you have a family change in the pipeline, or want to go to the doctor to be poked and prodded, it's best to do it during an open season.
Which is … right now!
Federal life insurance options
- Basic Coverage is the basic default coverage for the employee. It covers the insured's life for somewhere between one and two years' salary (based on age). The coverage is (about) twice the employee's yearly salary up to age 35, and then slides down to (about) one time the employee's yearly salary by age 45, and stays there.
FEGLI offers three levels of optional insurance above the basic insurance, cleverly named Option A, Option B, and Option C:
- Option A is a flat $10,000 of additional coverage for the employee. The employee needs Basic Coverage to be able to elect Option A coverage.
- Option B offers more substantial additional coverage for the employee. Each additional unit of Option B coverage (up to five units) cover the insured's life for an additional year's salary (rounded up to the nearest $1,000). The employee needs Basic Coverage to be able to elect Option B coverage.
- Option C is coverage for the employee's family. Each additional unit of Option C coverage (up to five units) covers the life of the employee's spouse for $5,000, and for each of the employee's dependents for $2,500. Like the other optional coverages, the employee needs Basic Coverage to be able to get this option.
How much life insurance to get?
FEGLI isn't available to everybody, of course, but take away the idea of open season, options, forms, life events, etc., it's a form of buying life insurance. So, FEGLI or not, here are some common things to consider when deciding how much insurance to buy, and even what kind:
- If you were to die today, what you want covered? A paid-off house? A free and clear college education? A worry-free sunset time for your spouse? A comfortable nursing home experience? Season tickets to the Redskins? (Hey, I'm not judging.) But if you can't pay for the things you want now, then insurance will need to make up the difference.
- What other insurance is in the picture already? Although there certainly is such a thing as too little insurance coverage, there's also such a thing as too much. You don't want to be paying so much for insurance that you're worth more dead than alive.
- Is a group policy better than an individual policy? With FEGLI, the only information that's taken into consideration for the premium is age. Gender isn't even taken into account, let alone race, weight, smoker vs. non-smoker, etc. The risk of the group as a whole is attributed to the individual. So, if you would be subsidizing the group (because you're a healthy weight, a non-smoker, female, all of your relatives lived past 90, etc.) then you might be better off getting an individual policy, because it may be cheaper. Best advice is to shop around.
[su_box title=”Looking for life insurance but can't get FEGLI?” style=”soft” box_color=”#cade84″ title_color=”#000000″ radius=”6″]%%%CODEEMBED%%%[/su_box]
- Is term life insurance the best? This is a loaded question of course, and I've heard a bunch of places that term life insurance (as opposed to types of life insurance that have an investment component to it) are a better deal. But those options are out there.
Federal employees: Please check out your FEGLI coverage!
Like I mentioned before: These open seasons don't come around but once in a blue moon. The next few weeks will be a very easy time to change things for the better if you want. Come October? Not so easy.
Check out the scoop over at OPM. It will answer your questions better than I can.
Got it? Good!! 🙂
