Federal employees are automatically enrolled in the Federal Employees’ Group Life Insurance (FEGLI) plan unless they opt out in writing before the end of their first pay period. This type of government insurance was established after the FEGLI Act passed Congress and was signed by President Eisenhower in 1954. Here’s a look at what this coverage involves and what your benefit options are if you work for the federal government.
Basic coverage
Federal employees can choose between one of two types of FEGLI plans, either basic coverage or optional coverage. The former is based on group term life insurance that doesn’t require a medical exam. It covers accidental death and dismemberment (AD&D). The cost for a premium plan is shared between policyholders and the federal government. The coverage amount is equivalent to your annual income, plus $2,000.
Your AD&D coverage reflects the same amount as your Basic coverage. Upon your death or loss of two or more limbs, you or your survivors will receive full benefits. You’ll only receive half the amount, though, for the loss of a single body part. The payout depends on your age. At 35 or above, underpays are twice the amount of your Basic coverage amount. Then every year after 35, the multiplier decreases a tenth until reaching your Basic coverage amount at age 45 or older.
Optional insurance
Within the category of “optional insurance,” there are options A, B, and C to consider. Option A extends coverage to $10,000, while option B allows you to get coverage five times your annual basic pay. Option C is designed for family members such as your spouse and children to receive benefits. This option also provides a coverage multiplier of five times your annual basic pay.
Designation of beneficiary
Upon getting hired by the federal government, employees are issued a designation of beneficiary form. It gives you the choice of who you want to be beneficiaries of your life insurance policy when you die. Without listing beneficiaries, it will be difficult to determine where the benefits will go, but the government will follow a standard procedure for making a decision. Listing beneficiaries on your policy is one of the most touching gestures you can do for your loved ones.
Changing the beneficiary’s designation
It’s possible to change the designation of the beneficiary after years go by and situations change. After a beneficiary dies, it’s a good idea to choose and list a new beneficiary on your policy. All you need to do is fill out Standard Form 1823, which is available at post offices. Once you make this change, it’s important to inform the new beneficiary about it.
Beneficiaries are commonly family members but can be friends or financial partners as well. Taking care of your loved ones means ensuring they have the financial support they need after you’re gone. Contact us at Premier Protection for an affordable FEGLI plan!
Life Insurance
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