Last week I wrote about Basic insurance under the Federal Employees’ Group Life Insurance program. This time I want to fill you in on Options A, B and C. These benefits may not be for everybody, but one or more of them might just be right for you.
Option A (Standard Optional)
Option A allows any employee who is covered under Basic Insurance to buy an additional $10,000 of coverage at his or her own expense. The premiums for Option A vary by age, starting at $0.30 bi-weekly for each $1,000 of coverage and ending at $6.00 for each $1,000 if you are between 60 and 65 years old. The monthly rates range between $0.65 for every $1,000 up to $13.00. Whether employed or retired, the premiums stop at age 65. 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. If you fit into that narrow window of time, you can get a copy of the form from your personnel office or download a copy at www.opm.gov, click on Forms.
Is Option A for you newcomers? 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.
Option B (Additional Optional)
If you are covered by Basic Insurance, Option B allows you to elect additional amounts of coverage at your own expense 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 for a large 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. If you are a retiree, they range between $0.043 and $2.40 cents per month.
When you retire, you can either elect a full reduction in your Option B multiples or no reduction at all. If you chose the full reduction, your premiums will stop and your coverage will decline by 2 percent 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.
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.
If you are covered by Basic Insurance, Option C lets you purchase coverage at your own expense for your spouse and any unmarried dependent children under age 22, or, if age 22 or over, incapable of self support before reaching age 22. Eligible dependent children include your natural children, adopted children, stepchildren, if they live with you in a regular parent-child relationship, recognized natural children and foster children, if they live with you in a regular parent-child relationship.
If you enroll in Option C, the amount of the coverage can be up to five multiples of $5,000 for a spouse and $2,500 for each eligible child. The cost of bi-weekly premiums is based on your age and the multiples of coverage you elect. It begins at $0.22 per multiple of coverage at age 35 and rises to $6.60 per multiple at age 80 or older.
If you are a retiree, you won’t have to pay any premiums if you let the value of the coverage decrease by 2 percent per month beginning at age 65 or when you retire, whichever is later, until it reaches zero. However, if you decide to maintain the full level of coverage, your monthly premiums will vary depending on your age, beginning at $0.48 per multiple at age 35 – which could happen if you retired on disability – and rise to $14.30 from 80 on. Like all other optional coverage, Part C coverage can be cancelled at any time.