FEGLI (Federal Employees’ Group Life Insurance) offers Basic life insurance and three types of Optional life insurance at attractive group rates. Newly eligible employees may obtain coverage without having a physical or furnishing proof of insurability. Most employees are eligible to continue their FEGLI coverage when they retire.
Life Insurance Means Peace of Mind for You and Your Family
Almost everyone needs life insurance; how much is for you to decide. Through the Federal Employees’ Group Life Insurance (FEGLI) Program, you have several choices in selecting the amount of life insurance that’s right for you. FEGLI offers:
Basic insurance: equal to your salary rounded up to the next even thousand, plus two thousand dollars, and
Three types of Optional insurance:
Option A – Standard, in the amount of $10,000;
Option B – Additional, in an amount from one to five times your annual rate
of basic pay after rounding your salary up to the next even $1,000;
Option C – Family, one to five multiples of coverage for your spouse and
your eligible dependent children. Each multiple is equal to $5,000 for the
death of your spouse and $2,500 for the death of each eligible dependent child.
Some important points to keep in mind:
– If eligible, you are automatically covered under Basic life insurance, unless you waive it.
– You must take action, within strict time limits, to elect Optional insurance. If you elect it when you are first eligible, you can get it without having to provide medical information to prove insurability.
– The FEGLI Program offers group rates and convenient payroll deductions.
– The U.S. Postal Service pays the entire cost of your Basic life insurance. You pay 100% of the cost of Optional insurance.
– FEGLI is group term insurance. It does not have any cash or paid-up value. You cannot get a loan by borrowing from this insurance.
– The amount of life insurance one needs varies by individual.
Who Is Eligible?
Most U.S. Postal Service employees, including part-time employees, are eligible for Federal Employees’ Group Life Insurance (FEGLI). If you have a question about eligibility, see your local personnel office. Participation is entirely voluntary. However, if you are eligible, you are automatically covered under Basic insurance, unless you waive this coverage. You will have Optional insurance only if you elect it. Remember, there are strict time limits to elect Optional insurance.
When Does My Coverage Begin?
Basic life insurance coverage for new employees is effective on the first day you are in a pay and duty status in an eligible position, unless you waive this coverage before the end of your first pay period. After your first pay period, you may cancel Basic at any time; the cancellation will be effective at the end of the last day of the pay period in which your local personnel office receives your cancellation.
Optional insurance for new employees is effective on the first day you are in a pay and duty status in an eligible position on or after the day your local personnel office receives your election. You only have 31 days from the date of your appointment to an eligible position to elect Optional insurance. Your opportunities to enroll in Optional insurance after those 31 days are limited.
Pay and duty status means you are not on annual leave, sick leave, donated leave, excused absence, or otherwise absent from duty.
New employees must complete a Life Insurance Election (SF 2817) to cancel Basic insurance or to elect Optional insurance. If you do not complete an election form, you will automatically be covered under Basic insurance only.
What Is Basic Insurance and How Much Does it Cost?
Basic insurance provides term life insurance at group rates. The U.S. Postal Service pays the entire cost of your Basic insurance. If you are eligible, you are automatically covered under Basic insurance, unless you waive this coverage.
Your Basic Insurance Amount (BIA) is equal to the greater of (a) your annual rate of basic pay rounded up to the next even $1,000 plus $2,000, or (b) $10,000.
Basic insurance also provides an Extra Benefit to employees under age 45, at no additional cost. This Extra Benefit doubles the amount of Basic insurance payable if you die when you are age 35 or younger. The Extra Benefit decreases 10% each year until there is no Extra Benefit if you die at age 45 or older.
How Do I Choose the Right Amount of Life Insurance?
Purchasing life insurance is a personal decision that only you can make. You should first consider the funds your survivors will need for immediate expenses, such as: uninsured medical costs, funeral expenses, lawyers’ fees to settle an estate, debts, and taxes. Young single people, who often don’t buy life insurance because they have no dependents, should consider that funeral expenses can amount to thousands of dollars and should be provided for in some way.
Here are some very general guidelines that may help you. Not everyone will need the same amount of life insurance. Fill in the blanks to estimate your family’s needs. If a particular line doesn’t apply, or you think it is too much coverage, just skip it. These results are just rules of thumb. For a complete analysis of your needs, you may want to consult a financial planner.
How Much Do I Need?
So you’ve decided that life insurance is a good idea. Now you’ll want to determine how much you’ll need. This simple chart can help you come up with an estimate. Fill in the blanks to estimate your family’s needs.
LIFE INSURANCE… HOW MUCH DO I NEED?
1. Multiple of your annual income (in dollars) that you wish to provide your family if something were to happen to you
2. Annual expenses above and beyond daily living costs for you and your dependents (e.g., tuition, care for a disabled child or parent)
3. Emergency funds (3 to 6 months of living expenses)
4. Estimated amount for your funeral expenses (U.S. average is $5,000 to $10,000)
5. Total the estimate of your family’s needs (add lines 1 through 4)
6. Your total liquid assets (e.g., savings accounts, CDs, money market funds, existing life insurance)
7. Subtract line 6 from line 5 and enter the difference here:
The net result (line 7) is an estimate of the shortfall your family could face upon your death. Remember, these results are just rules of thumb. For a complete analysis of your needs, you may want to consult a financial planner. The maximum coverage on your life available through FEGLI is about six times your salary (or about seven times for enrollees age 35 or under), through a combination of Basic, the Extra Benefit, Option A ($10,000), and Option B (maximum of 5 times your salary).
Your FEGLI Life Insurance for Federal Employees
Your FEGLI Life Insurance for Annuitants and Retiring Employees