If you work for the federal government, reviewing your federal employee insurance options every year is important. Life insurance is an important component of a benefits package because it can contribute to your family’s financial stability. Here are important points about the Federal Employees’ Group Life Insurance (FEGLI) program.
What Insurance Options Are Available for Federal Employees?
Federal workers outside the military have two main options for life insurance: policies offered through FEGLI or plans from private and nonprofit organizations. Federal employee insurance options include coverage for spouses and dependents. If you enroll in FEGLI, you won’t need to get a physical examination, but you probably will if you choose a private or nonprofit plan. The advantage to choosing options beyond FEGLI is lower costs.
How Is Cost Determined?
FEGLI divides its policies into two types: Basic and Optional. A Basic FEGLI policy provides coverage based on your salary rounded to the next $1,000 plus $2,000. The plan includes Accidental Death and Dismemberment coverage and an “Extra Benefit” for employees under age 45.
An Optional FEGLI policy has three options: A, B, and C. Option A is considered standard, providing $10,000 of life insurance coverage. Option B provides additional coverage if you apply a multiplier to your salary. This coverage is free for postal workers, and option C reflects family coverage. To get Optional FEGLI coverage, you must enroll within 60 days of becoming eligible.
The Basic policy rate increases every five years but is otherwise not based on age for policyholders under 65. This premium’s cost depends on the coverage you choose, which is often based on salary and a multiplier. You might, for example, choose coverage four times your salary. Be aware that each insurer sets its own rate, which is why it helps to get different quotes before enrolling in a plan.
How Do You Enroll?
All new federal employees are automatically enrolled in FEGLI Basic coverage unless they opt-out. Otherwise, enrollment involves completing Standard Form (SF 2817) called “Life Insurance Election.” Then you should submit the form to your Human Resources department either in person or electronically.
Special enrollment exists for federal employees who have missed their deadline to enroll under certain conditions such as marriage, divorce, death of a spouse, or adopting an eligible child. Periods of open enrollment occasionally occur, although the last one was in 2016, and before that was in 2004.
You can apply for FEGLI by taking a physical exam, but this path doesn’t include Option C, which relates to care for immediate family members. Meanwhile, outside organizations might allow more flexibility for enrollment. Find out from a life insurance expert if you can purchase riders for specific long-term conditions.
What Happens After You Leave Federal Employment?
Your FEGLI plan only stays with you while you remain a federal employee. If you decide to join the private sector, your coverage will end. However, most federal employees have the option to convert to a private plan. To receive FEGLI benefits into retirement, you’ll need to maintain your federal job for five years leading into retirement. You’ll get 31 days of free coverage even if you leave the federal government.
If you die during your federal employment, your benefits will be awarded to the individual you named on the “Designation of Beneficiary” form SF 2823. It’s important to name a beneficiary because if not, the federal government will follow a specific order starting with your spouse, children, and parents.
How We Can Help
Understanding federal employee insurance options are different from the private sector. It’s important to be clear on what your life insurance plan covers so that you know your family has sufficient resources after you pass away. Contact us at Premier Protection for more information on the ideal retirement plan for your situation.
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