Expert's View

The dollar amount of your Basic life insurance is equal to your basic pay. Image: tomertu/Shutterstock.com

Reg Jones

The Federal Employees’ Group Life Insurance program is unique among the four government-sponsored insurance programs for federal workers in that some of the available coverage is automatic on hiring unless it is declined. That is, that FEGLI coverage is “opt out” rather than “opt in” as it is in the health insurance, vision-dental insurance and long-term care insurance programs.

If you didn’t decline FEGLI coverage when you came on board, you are automatically covered by Basic insurance, which provides group term life insurance without the need for a medical examination. That includes accidental death and dismemberment insurance (AD&D), so-called “double indemnity” protection.

The dollar amount of your Basic life insurance is equal to your basic pay – the amount from which retirement deductions are taken – rounded up to the next higher thousand dollars, plus $2,000. That amount changes every time your Basic pay changes.

The AD&D benefit you would be entitled to depends on the nature of your injury. If you were to die or lose two or more parts of your body, such as a hand, foot or eye, you’d receive the full amount; it would be half that amount is you only lose one part. The actual dollar amount payable under AD&D varies according to your age. If you are age 35 or under, you’d receive twice the amount of your Basic life insurance. For each year you are over 35, the multiplier drops by one-tenth until it is equal to your Basic insurance amount at age 45 or older.

If you are covered by Basic life insurance, there are three other life insurance benefits that are optional. If you choose to enroll in any of them, you will be responsible for paying 100 percent of the cost.

Option A – Standard Insurance

Back when FEGLI first became available in 1954, there were only two kinds of life insurance available to federal employees, Basic and Standard. While Basic life insurance was paid for by matching contributions from the government and its employees, Standard was available at an employee’s own expense for those who wanted greater coverage. In those days, the value of Standard, $10,000 was far more than most employees earned in a year.

If you are covered by Basic life insurance, you can still buy an additional $10,000 worth of coverage at your own expense; yes, the amount has not changed in 70 years even though $10,000 now is only about one-ninth of the average federal employee salary. While the premium rates are quite modest for younger employees, they increase as you get older. Up to age 35, you pay a flat rate. Beginning at age 35, the premiums increase every five years.

Option B – Additional

Option B allows you to elect an amount equal to one, two, three, four or five times your annual Basic pay, after rounding it up to the next $1,000.

Option C – Family

Option C allows you to provide coverage for your spouse and eligible dependent children under one policy at your own expense. Just as with Option B, you can elect up to five multiples of coverage, with each multiple equaling $5,000 for your spouse and $2,500 for each of your children. The premium cost per multiple is based on your age.

Designation of Beneficiary

When you joined the government, you were asked to fill out a designation of beneficiary form. That’s where you wrote down the names of those you wanted to benefit from your life insurance if you died. If you haven’t checked what you put there years ago, you really need to do that.

If you don’t change that designation, when you die the proceeds of your life insurance might not go to the person or persons you would select today. For example, if you were single when you were hired, you may have designated your parents or siblings; if you since have married, that probably is not the way you’d like to have your benefits distributed today.

To change a FEGLI designation, fill out a Standard Form 1823, available from your personnel office or online at www.opm.gov/forms/standard-forms, click on SF 2808 (CSRS) or SF 3102 (FERS)..

If you didn’t fill out a designation of beneficiary form for your life insurance, it will be distributed according to the standard order of precedence:

• your spouse;

• if you have no spouse, to your child or children in equal shares, with the share of any deceased child distributed among the descendants of that child;

• if you have no children, to your parents in equal shares or the entire amount to the surviving parent;

• if you have no parents, to the duly appointed executor or administrator of your estate;

• and, finally, to your next of kin under the laws of the place you were living at the time of your death.

Note:  If you are divorced, what happens to your life insurance benefit may have been settled by a court order.

To find out who you’ve designated as a beneficiary or beneficiaries, go to your servicing personnel office and check your Official Personnel File (OPF). That way you can be sure that the ones on file are the ones you now want to receive the benefits in the event of your death.

Now that we’ve looked at the terms of the program for current federal employees, next week we’ll look at the natural next issue, FEGLI coverage for federal retirees.

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