Last week, I wrote about the Basic Insurance coverage you get under the Federal Employees’ Group Life Insurance program. Now I want to walk you through the first and oldest of the optional insurance offerings. It’s called Option A (Standard Optional Insurance).
The federal government has secured group rates for all the insurance provided under the FEGLI program. That’s a good thing because it keeps the premiums low. However, there’s a big difference between Basic insurance and the optional insurances. The government pays one-third of the Basic premiums. However, if you elect any of the optional kinds of coverage, you’ll pay 100 percent of the premiums.
Option A allows any employee who is covered under Basic Insurance to buy an additional $10,000 of coverage. The premiums for Option A vary by age. It starts at $0.30 bi-weekly for each $1,000 of coverage and ends at $6.00 for each $1,000 if you are 60 or older. The monthly rates are $0.65 for every $1,000 up to $13.00. If you are retired and 65 or older, you don’t have to pay any further premiums; however, your coverage will decline by 2 percent per month until it reaches 25 percent of its face value.
Unlike Basic insurance, enrollment in Option A isn’t automatic. You’ll have to submit a completed Standard Form 2817, Life Insurance Election, to your personnel office within 31 days of your appointment to a position that provides FEGLI coverage. You can get a copy from your personnel office or download a copy at www.opm.gov, click on Find Form(s).
Is Option A for you? It might have been back in 1968 when $10,000 was more than the salaries of many federal employees. Today it may only be a good choice for those of you who have a short-term need to provide additional money for your family if you die while your Basic coverage amount is low and/or you have a substantial amount of debt you don’t want to pile on your heirs. It can always be cancelled if you no longer feel a need for it, unless you have assigned the benefit to someone else. I’ll talk about that in a future article.