Reg Jones Expert's View

When you retire you’ll have to make some decisions about your Federal Employees’ Group Life Insurance coverage. Specifically, which benefits you want to keep and what you are willing to pay for them.

Basic insurance

ADVERTISEMENT

Your Basic coverage is equal to your base pay – the amount from which retirement deductions are taken – rounded up to the next $1,000 plus $2,000. When you retire, you’ll be offered these choices: a 75 percent reduction in your Basic insurance, a 50 percent reduction, or no reduction.

If you choose the 75 percent reduction, you’ll continue to pay the same premiums for this coverage that you did while an employee, and you’ll do that until you reach age 65. At that point, you won’t have to pay any premiums for that insurance and its value will decline by 2 percentage points per month until it reaches 25 percent of its original face value.

If you choose the 50 percent reduction, it will reduced by 1 percentage point per month until it reaches 50 percent of its face value. For that benefit, you will have to pay higher premiums.

If you choose no reduction option, you’ll pay even higher premiums.

Option A – Standard Insurance

If you are covered by Basic insurance, you can buy an additional $10,000 of coverage. Premium deductions will stop at the end of the calendar month in which you reach your 65th birthday. At that point, your Option A insurance will automatically decline by 2 percentage points per month until it reaches 25 percent of its face value, that is, $2,500.

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. At retirement, you’ll be offered the opportunity to retain the coverage you had as an employee. If you do, you’ll continue to pay the full cost of that coverage, which will continue to rise as you grow older.

You can reduce that cost by reducing the number of multiples or by allowing the dollar value of that coverage to decline beginning at age 65 at a rate of 2 percentage points per month for 50 months until it reaches zero.

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 a function of your age.

Option C coverage is free after age 65 when it will automatically decline at a rate of 2 percentage points per month for 50 months until it reaches zero.

FEGLI Basic vs. Optional Coverage

Key Provisions of FEHB for Federal Employees

Boosting Your Annuity – Your High-3 Explained

2020 Federal Employees Handbook