Let’s break down the four basic components of FEGLI – Basic Insurance, Option A (Standard Optional Insurance), Option B (Additional Optional Insurance), and Option C (Family Optional Insurance).
Basic Insurance
You are automatically enrolled in Basic insurance when you are hired. You have the right to decline it, but most people don’t. Your Basic insurance amount equals your annual basic salary rounded up to the next $1,000 plus $2,000. So, if your salary is $61,500, your coverage would be ($62,000 + $2,000) $64,000. The government foots the bill for a third of the bi-weekly premiums and you pay the remainder. Your Basic policy also includes Accidental Death and Dismemberment coverage.
Option A (Standard Optional Insurance)
Option A gives any employee who is covered by Basic insurance the choice to purchase an additional $10,000 of life insurance coverage. Enrollment isn’t automatic, and you’ll pay the full amount of the premium, but keep in mind that the government has negotiated a lower rate than you would likely find on your own.
Option B (Standard Optional Insurance)
If you want a higher level of coverage than Option A allows, you can explore Option B. It lets you elect additional coverage amounts equal to one, two, three, four, or five times your rate of basic pay, rounded to the next higher $1,000. Just like Option A, enrollment in Option B is not automatic, you must be enrolled in Basic insurance to qualify, and you will pay the full premium.
Option C (Family Optional Insurance)
For those of you with families, Option C lets you purchase coverage for your spouse and any unmarried dependent children under age 22 (or, if age 22 or over, incapable of self-support before reaching age 22). You must be enrolled in Basic insurance to sign up for Option C, and the amount of coverage can be up to five multiples of $5,000 ($25,000) for a spouse and $2,500 for each eligible child. Note that with this insurance, you are the beneficiary, not the individual covered. As with the other optional insurance coverage, you will pay the full premium.
As you near retirement, you might want to assess the amount of insurance you have and whether the level of coverage is appropriate. An FRC® trained advisor can give you an analysis and determine if the amount you pay in premiums could be better utilized in your retirement portfolio.
