Reg Jones Expert's View

In these uncertain times, when federal employees are either worried about keeping their jobs or eager to abandon them, the issue of life insurance takes on new importance. For decades most employees and many retirees have depended on the Federal Employees’ Group Life Insurance program to provide their families with tax-free cash when they die.

One of the questions I hear most frequently is, “Can I lose my FEGLI coverage?” The answer is yes, but only under certain circumstances. You can lose coverage if:

  • you leave government for any reason other than retirement;

  • you go to another government job that doesn’t provide FEGLI coverage;

  • you are in a non-pay status for more than 12 months;

  • your annuity is terminated; or

  • your pay or annuity after all other deductions are taken is too small to pay the premiums.

The first two reasons are the most likely to cause a loss of coverage. Take the first. All you have to do is resign from the government and your FEGLI goes poof. The same is true if you take a government job where FEGLI isn’t available, e.g., the District of Columbia government, or can’t be offered to you, e.g., if you accept a temporary or intermittent position or a term appointment in the government that is expected to last one year or less.

If your insurance coverage stops, you get a cost-free 31-day extension of coverage and you have a right to convert any coverage you have under Basic and Options A and B to an individual policy without – and this is important – having to provide any evidence of medical insurability. However, if you buy that policy you’ll be paying 100 percent of the individual rates not a portion of the group ones. Exactly how much you will end up paying will depend on several factors:

  • how much insurance you apply for;

  • the type of policy you want;

  • your age; and

  • your risk category on the day your group insurance ends.

You can have this policy written for any amount equal to or less than the total amount of coverage you had when your group policy was terminated. However, you must make application for the policy within 31 days after your coverage stops. To get detailed information and apply for such a policy, you need to write to the following address:

Office of Federal Employees’ Group Life Insurance

P.O. Box 2627

Jersey City, NJ 07303-2627

Or you can call them at 1-800-633-4542.

The only bright spot in all this is that if you go back to work for an agency where you are eligible for FEGLI coverage, you may reenroll under certain conditions. First, you may reenroll during an open season (a fairly rare occurrence) as long as you are found to be medically insurable. Second, you may do so if a life event has changed your situation, e.g., you get married or have a child. On the other hand, once a retiree has lost FEGLI coverage, it’s rarely possible to enroll again.