How well do federal employees and retirees really understand their group life insurance policies? Here’s the breakdown for adding, changing, and dropping coverage.
What “FEGLI” on Your Paycheck Means
If you’re a new federal employee, you may notice a line on your paycheck labeled “FEGLI.” That deduction is for the Federal Employees’ Group Life Insurance (FEGLI) program. Most new hires are automatically enrolled in Basic coverage on day one, which means you already have life insurance in place, even if you’ve never filled out a form or made an election.
FEGLI is the largest group life insurance program in the world, and understanding how it works is an important part of protecting your family’s financial future. This article will cover who qualifies for the insurance, the rules surrounding auto-enrollment and adding optional coverage, including how to drop FEGLI, and what alternatives can save you money as you grow older.
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Are You and Your Family Covered Under FEGLI?
Most federal civilian employees are eligible for FEGLI and are automatically enrolled in Basic coverage. A few groups, such as temporary employees, seasonal postal workers, certain Farm Credit Administration positions, and some overseas educators, are excluded.
If you want coverage for your family, FEGLI offers it through Option C, which provides life insurance for your spouse and dependent children. This coverage is not automatic, you must elect it during your initial enrollment window, a rare open season event, or after a qualifying life event. If you’ve been paying premiums for a dependent that is no longer eligible, it is possible to request a refund.
FEGLI Coverage: Basic and Options A, B, and C
FEGLI offers one core benefit and three optional add‑ons. I’ve always liked to think of it as a tree with basic being the trunk and the optional parts being the branches as you’re not able to have A, B, or C unless you’re also paying premiums for Basic.
| Type | Coverage |
| Basic Coverage | Equals your annual salary rounded up to the nearest thousand, plus $2,000. The government pays a portion of the premium, making Basic the most affordable part of the program. |
| Option A – Standard | Adds a flat $10,000 of additional coverage. |
| Option B – Additional
|
Allows you to multiply your salary by 1 to 5 times for a larger death benefit. This is the most customizable, and often the most expensive, part of FEGLI as you age. |
| Option C – Family | Provides coverage for your spouse and dependent children in units of insurance you select. |
Don’t forget your beneficiaries: Your FEGLI death benefit is paid according to your beneficiary designation, not your will. Keeping this form updated is essential.
FEGLI Enrollment Rules: Adding and Dropping Coverage
FEGLI has very specific rules about when you can change your coverage, but you can drop or reduce coverage at any time. There are no restrictions on canceling or lowering your FEGLI elections, but the decision to do so should not be taken lightly.
Adding coverage is much harder. You can only increase coverage if one of the following applies:
- Qualifying Life Event (QLE): marriage, divorce, death of a spouse, or birth/adoption of a child. You have 60 days to act. Retirement is not a QLE!
- Medical exam: If you don’t have a QLE, you can apply for more coverage by completing a physical exam and receiving medical approval.
- Open Season: FEGLI Open Seasons are extremely rare. The last two were in 2016 and 2004.
Because opportunities to add coverage are limited, it’s important to elect the right amount early in your career.
Options, Costs, and Rules for FEGLI in Retirement
FEGLI works differently once you retire, and planning ahead is essential. Here are some things to be aware of as you make your federal retirement plan:
The 5‑Year Rule. Similar to FEHB, to keep FEGLI into retirement, you must have been continuously enrolled in Basic coverage for the five years immediately before retiring. The same rule applies to Options A, B, and C. If retiring early through a VERA or DRP offer, then you can likely qualify for a waiver to this 5 year rule.
Retirement is not a Qualifying Life Event. You cannot add coverage when you retire. Your elections must already be in place.
Your choices in retirement
Once retired, you’ll decide whether to:
- Keep full Basic coverage
- Reduce Basic coverage (which may eliminate premiums)
- Drop Basic or optional coverage entirely
Option A can be carried into retirement at no cost if you choose the 75% reduction. Option B becomes significantly more expensive with age as premiums increase every five years and can become cost‑prohibitive for many retirees. Option C should be reviewed to ensure your covered dependents are still eligible.
Next Steps: Review Alternatives to FEGLI Before You Retire
FEGLI is cost‑effective early in your career, especially under age 45. But as you get older, FEGLI premiums, especially for Option B, increase sharply. For many federal employees, private life insurance can offer:
- Level premiums that never increase
- More coverage for the cost
- Customizable term lengths
- Better long‑term value in retirement
Before you retire, or before FEGLI premiums rise again, it’s smart to compare your FEGLI costs with private market alternatives.
United Benefits can help you review your coverage, understand your options, and find the most cost‑effective plan for your family.
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