In my last two articles, I offered a refresher course on Basic Insurance and Option A (Standard Optional Insurance) coverage available under the Federal Employees’ Group Life Insurance program. Now I want to discuss Option B (Additional Optional Insurance).

While the government pays one-third of the cost of Basic Insurance premiums, if you enroll in any of the life insurance options, you are responsible for paying 100 percent of the premiums. Still, you are getting a pretty good deal because the government has been able to negotiate lower premiums than you’d get from private insurance companies.

If you are covered by Basic Insurance, Option B allows you to elect additional amounts of coverage that are equal to one, two, three, four or five times your rate of basic pay, rounded to the next higher $1,000. This additional coverage can be a real advantage and provide peace of mind if you need to provide a substantial sum of money to your family or foresee the possibility of uninsured medical costs, funeral expenses, debts and/or taxes.

If you are an employee, your bi-weekly premiums vary by age and range from two cents per $1,000 of coverage at age 35 up to $2.40 per $1,000 at age 80 or above.

When you retire, you can either elect a full reduction in your Option B multiples or no reduction. If you chose the full reduction, your premiums will stop and your coverage will decline by 2 percentage points per month for 50 months until it reaches zero. That reduction will start either at the second month after your 65th birthday or when you retire, whichever is later.

If you decide to keep the full value of your Option B coverage, the monthly premiums will depend on the age at which you retire. And they’ll be higher than what you’d have to pay as an employee. For example if you were age 35 or younger – something that could happen if you retired on disability – your monthly premium for each $1,000 of coverage would be $0.043. At age 55 through 59, it would be $0.498. It would continue to rise in five year blocks until it tops out at $5.50.

Whether you are an employee or a retiree who elects no reduction, full coverage and the payment of premiums will continue until you cancel the coverage. That’s something you can do unless you have assigned that benefit to another. I’ll write about that in a future article.