A federal employee or former employee (including an annuitant) may make an irrevocable assignment of his or her coverage under the Federal Employees’ Group Life Insurance policy to another person or to a trust. Individuals who assign their FEGLI ownership continue to be insured under FEGLI. However, they irrevocably transfer to the assignee many of the attendant rights, benefits, and responsibilities for their basic, standard optional, and additional optional insurance. (Family optional insurance cannot be assigned.) Assignments of insurance are generally made to comply with the requirements of a court order upon divorce or for personal financial reasons.

An assignment automatically cancels a prior designation of beneficiary. An assignment of FEGLI coverage may be made by a federal employee or former employee in order to comply with a court order for divorce. Frequently, the court will order a federal employee or former employee to name a former spouse as the beneficiary of his or her life insurance proceeds. However, under the FEGLI law, an insured person may change his or her designation of beneficiary at any time. This is true even if a court order directs otherwise, because the FEGLI law preempts state law, and court orders based on state law, to the extent that the state law is inconsistent with the FEGLI contract. Assigning FEGLI coverage to a former spouse, however, provides a means for ensuring that, when FEGLI benefits are awarded to a former spouse in a divorce, the employee is not able to circumvent the award by changing the designation of beneficiary or cancelling the coverage at some later date.