MrInsurability August 14, 2016 No Comments

MrInsurability.comToday I’d like to look at a life insurance specific to employees of the Federal Government.

The Federal Employees’ Group Life Insurance or FEGLI is a group life insurance plan that is employer-sponsored and designed for Federal employees. It is considered to be the world’s largest group life insurance program, because it insures approximately 4 million federal employees, retirees and their family members.

FEGLI can help you protect your loved ones from burdensome funeral costs and catastrophic loss of your income if you die unexpectedly.

This is a great benefit for the members, but they are not stuck with only that coverage. They can also purchase any additional coverage that they wish, just as anyone else can. As a matter of fact, in the U.S., about 98% of employers provide several life insurance options to their employees.

FEGLI offers group life term insurance to its members. This means that the FEGLI does not accumulate any cash or paid-up cost or value. It provides basic coverage for life insurance, as well as three other options.

Typically, a new federal employee will be covered automatically, by a basic life insurance policy and your employer deducts insurance premiums automatically from your pay. Please note that the employee can waive this coverage, should they so desire.

FEGLI is meant for use as a type of immediate security against financial difficulties or death and not intended as a kind of life insurance having a monetary or cash value, such as those policies that are available to most anyone not a government employee.

OFEGLI or The Office of Federal Employees’ Group Life Insurance is a private firm that has an agreement with the Federal Government to deal with, process and pay insurance claims for the “FEGLI” program.

Besides the basic life insurance provided to all employees, there are 3 additional, optional coverage’s that can be chosen. However you need to have the basic insurance first, so you can select an option. Unlike the basic coverage, registration or qualifying for the optional policies is not automatic, which means that there may be some requirements to qualify.

As an example, your age will not influence your basic insurance cost. However, with the optional policies, your age is one of the factors in determining the cost.

Part-time employees, with a few exceptions, are normally qualified to enroll in the FEGLI and their insurance coverage amount is determined and established in the exact same manner as those of full-time employees.

Qualified and dependent children can include natural-born children, stepchildren (if they are living with employees), adopted children, accepted natural children and “foster children” (if they are living with employees).

The Federal Employee Service Center suggests that you get a benefit analysis in order to investigate and assess your present FEGLI coverage, rates and cost of ongoing or continuing insurance coverage. This cost analysis will assist you in making the best choices leading to your retirement.

Lastly, let’s take a look at the potential costs of this coverage for the employee.

BASIC PLAN:

Amount of Coverage: Your annual salary rounded up to the next even $1,000, plus $2,000

Persons Covered: You (the employee)

Cost each biweekly pay period: 15¢ per $1,000 of coverage (Free for postal employees)

Cost increases with age: None

Automatic Enrollment for New Employees: Yes, unless you waive coverage

OPTION A

Amount of Coverage: $10,000

Persons Covered: You (the employee)

Cost each biweekly pay period: Starting at 20¢ per $1,000

Does cost increase with age: Yes

Automatic Enrollment for New Employees: No, you must select this coverage

OPTION B

Amount of Coverage: 1, 2, 3, 4 or 5 multiples of your salary rounded up to the next even $1,000

Persons Covered: You (the employee)

Cost each biweekly pay period: Starting at 2¢ per $1,000 of coverage

Does cost increase with age: Yes

Automatic Enrollment for New Employees: No, you must elect this coverage

OPTION C

Amount of Coverage: 1, 2, 3, 4 or 5 multiples. Each multiple equals $5,000 for the life of your spouse and $2,500 for the life of each eligible child

Persons Covered: Your spouse and unmarried dependent children under age 22

Cost each biweekly pay period: Starting at 22¢ per multiple

Does cost increase with age: Yes

Automatic Enrollment for New Employees: No, you must select this coverage

As you can see, it is very important that you are familiar with and knowledgeable about FEGLI, so that you are able to make the correct choice as far as your insurance plan and coverage is concerned!