Updated: November 27, 2024
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Federal Employees' Group Life Insurance (FEGLI) is a low-cost, sometimes free, term life insurance plan for federal employees. Due to its affordability and convenience, many enroll automatically when they start government work.
Private term life insurance, available to anyone, often costs more but offers broader coverage. If you don’t have dependents, FEGLI may suffice. However, supplementing FEGLI with private insurance can better meet your family’s needs if you have beneficiaries.
Federal Employees' Group Life Insurance (FEGLI) is a low-cost group term life insurance for federal employees, ideal for those needing basic coverage.
Private term life insurance provides coverage for diverse financial needs and allows extensive policy customization. It's ideal for those requiring tailored financial protection.
Depending on personal circumstances and needs, federal employees already covered by FEGLI can supplement it with private term life insurance for broader coverage.
FEGLI is exclusively available to federal employees, but it has low coverage. Policyholders can keep their policy for life unless they resign, in which case the FEGLI coverage continues for 31 days only. However, they can convert it to an individual policy.
Term life insurance is available to everyone. However, the monthly premium may be much higher than FEGLI premiums. Private policies provide higher coverage per dollar and more extensive benefits.
FEGLI is an affordable option and a good starter policy for eligible employees. However, it often doesn’t provide enough coverage, especially for breadwinners. FEGLI basic life insurance can work as a supplement to private term life insurance.
As your needs grow, consider adding term life insurance, whether you have federal employee group life insurance or not. For example, term life insurance can ensure your spouse or family is financially supported if you get married. Its benefits can help cover a mortgage and pay off debts if you pass away.
Federal Employees' Group Life Insurance (FEGLI) is readily accessible to all federal employees. If an employee resigns, they must convert their federal group life insurance to a standard policy to maintain the FEGLI coverage. Otherwise, it ceases 31 days post-resignation.
Private term life insurance is available to all. Whether or not you can get a policy depends on your preferred insurer.
USPS workers get access to free government life insurance. Other federal employees can sign up at a very low, affordable biweekly rate that their salary determines.
Depending on age, private term life insurance may cost more than FEGLI. However, you can customize a policy to provide exponentially more coverage.
FEGLI basic coverage has a death benefit equal to your annual salary (rounded up to the nearest thousand) plus $2,000 (an extra benefit that doubles the amount that applies to those 35 and under) or $10,000. You can also pay for optional coverage, such as an additional $10,000, extra coverage of one to five times your salary or family coverage.
Private term life insurance provides more coverage per dollar. Most insurers would have no problem insuring you for hundreds of thousands or millions as long as you’re eligible for the policy and can afford the premium.
You can keep your federal employee life insurance after retirement at potentially no cost to you at that time. You can also convert your FEGLI policy into a whole life insurance product.
Term life insurance can vary on policy length. For example, you may choose a 10-year or 30-year policy. You may be able to convert a term life policy into a whole life policy or extend its term — it’s best to discuss your options with an insurance agent.
This life insurance for federal employees doesn’t accumulate cash value. Private term life insurance policies have no accumulated cash value.
FEGLI basic coverage includes, at no additional cost, accidental death and dismemberment coverage. Ask your employer if other FEGLI riders are available, though it might make more sense to put your funds toward a more comprehensive private term life insurance policy.
The private term life insurance riders you can get will depend on your insurer. However, some common riders to expect are the waiver of premium, guaranteed insurability and accidental death and dismemberment.
When a FEGLI life insurance claim needs to be filed, beneficiaries must complete a Federal Employees Group Life Insurance Form and submit it with any necessary documents, such as a death certificate. Once you provide all required documentation, the FEGLI payout is generally processed promptly.
Private term life insurance claims may vary significantly from one insurer to another but typically involve a similar need for documentation, including the policy, a claim form and the insured's death certificate. However, private insurers might conduct more extensive reviews depending on the policy's terms and the circumstances of the claim.
Federal employees are automatically enrolled in their division’s FEGLI plan unless they opt out. They receive basic coverage but can add optional coverage for extra protection if needed.
The three FEGLI options are:
The FEGLI cost structure is affordable and heavily subsidized by the government. For FEGLI basic coverage, employees contribute only a tiny portion of the premium, which is deducted biweekly. As employees age, the premiums for additional coverage options increase.
Here's how FEGLI premiums adjust with age for additional options:
FEGLI coverage can be continued into retirement with certain conditions affecting the premiums, especially after reaching 65, where some reductions in coverage and cost adjustments may apply.
The OPM FEGLI Handbook and OPM FEGLI Fast Facts provide more details on how age affects FEGLI life insurance rates.
Comparing FEGLI and term life insurance helps you choose a plan that fits your financial goals. Understanding their benefits and limitations ensures you make an informed decision that meets your needs.
You don’t have to choose between FEGLI and term life insurance from a private company. You can get both if needed.
FEGLI is term life insurance for federal employees. While affordable, FEGLI death benefits may not be enough, especially for breadwinners with multiple dependents who need help with expenses like college tuition or a mortgage. For more comprehensive coverage, consider private term life insurance. Compare your FEGLI options with private policies to determine if having both is the right choice.
When choosing life insurance, several factors affect the type and amount of coverage you need. Understanding these factors helps ensure your life insurance matches your financial goals and circumstances. Here are key considerations to guide your decision:
Evaluate your financial responsibilities and dependents' needs to determine the right coverage amount. Consider your current debts, ongoing living expenses and future financial obligations, such as children's education.
Use tools, such as a FEGLI calculator or life insurance needs calculator, to estimate how much insurance is necessary to cover your financial needs. This ensures that your FEGLI life insurance payout and/or private life insurance coverage provides enough financial support to maintain your family's lifestyle and meet their future needs in your absence.
Your age and health are critical factors in determining insurance premiums. Younger adults in good health typically pay lower rates, as they're less risky to insurers. Pre-existing conditions or unhealthy lifestyle choices can raise premiums. Understanding this helps you plan when to get a policy and estimate the cost.
Your life insurance should be a key component of your long-term financial plan, particularly with retirement in mind. Consider how your insurance needs might change, such as decreasing debts but increasing medical expenses.
Compare different life insurance policies and rates to find the best coverage at the lowest price. Consider various insurers, policy types, and coverage options. Be sure also to assess the insurer's reputation, customer service, and policy flexibility.
If you've decided to supplement your coverage with private term life insurance, start your research with MoneyGeek's analysis of the best term life insurance providers based on their affordability, financial stability, product offerings and customer satisfaction. Also, review the cheapest term life insurance policies if your priority is to save money.
Review our answers to frequently asked questions about FEGLI vs. term life insurance to learn more about your options.
Federal Employees' Group Life Insurance (FEGLI) is a program where federal employees can get standard term life insurance benefits at a discounted group rate. You can choose basic insurance — free for postal office workers and at a low cost for other federal employees — and optional insurance, which increases your premium.
FEGLI is exclusive to federal employees and is given at an affordable, sometimes free, rate. However, FEGLI coverage amounts are often low. Term life insurance costs more but has better customizable coverage for the general public.
If you're a federal worker, you can get FEGLI and private term life insurance. However, if you're not a federal worker, you can't get FEGLI but can get a term life policy.
FEGLI Option B is an additional coverage plan that lets federal employees increase their life insurance by one to five times their annual salary. This option offers significant death benefits and can be adjusted to fit changing financial needs and responsibilities, making it a flexible choice for comprehensive protection.
Whether FEGLI Option B is worth it depends on your financial and family situation. As it significantly increases coverage, it can benefit those with higher financial obligations or dependents. However, as premiums increase with age, weigh the cost against potential benefits and consider other more cost-effective insurance solutions.
The FEGLI death benefit for basic coverage equals the employee's annual salary to the nearest $1,000 plus an additional $2,000. For those under 35, the benefit doubles under the Extra Benefit provision, enhancing financial security for younger employees at no additional cost.
The FEGLI death benefit after retirement depends on the coverage choices made at retirement. Starting at age 65, coverage may decrease to 25% of its pre-retirement amount, which affects the final payout. Retirees should plan carefully for their coverage needs and understand how these reductions will impact their beneficiaries.
Continuing FEGLI after retirement offers a safety net, especially if other coverage options are more expensive or less suitable. Retirees can adjust their coverage levels with FEGLI options, which may cost less while still providing essential protection. However, evaluate your personal health, financial responsibilities and FEGLI alternatives to make an informed decision.
Whether to cancel FEGLI coverage depends on your current life insurance needs and the availability of better alternatives. FEGLI rates are generally competitive but may become less cost effective as you age. Switching might be sensible if you find a policy that offers better benefits, more tailored coverage or lower costs. Continually assess your financial security and coverage requirements before making such decisions.
The time it takes to process a FEGLI claim for death benefits varies, generally taking a few weeks. The speed of FEGLI payout depends on submitting complete documentation and the absence of any complicating factors.
The processing time for life insurance claims varies from a few days to several weeks, depending on the insurer and the policy's specifics. Contact the insurer promptly and provide complete documentation to ensure a smooth process.
Federal Employees Group Life Insurance (FEGLI) offers convenient, employer-sponsored life insurance for federal workers. While FEGLI rates may increase with age, it provides flexible coverage and valuable death benefits. For many federal employees, FEGLI is an essential coverage option.
FEGLI deduction is the amount automatically taken from federal employees' paychecks to cover FEGLI premiums. This deduction covers the cost of the federal employee life insurance policy and varies based on FEGLI options and the employee’s chosen coverage level.
FEGLI is a form of term life insurance. FEGLI coverage continues as long as the federal employee remains employed and pays premiums. Unlike whole life policies, this government employee life insurance doesn't build cash value over time.
FEGLI covers most causes of death, including suicide, after a waiting period. It provides death benefits in most scenarios, though restrictions may apply based on specific FEGLI options and policies. Review the terms and conditions thoroughly to understand your coverage better.
About Mark Fitzpatrick
Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.
Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.
