Reg Jones Expert's View

I began this Federal Employees’ Group Life Insurance program series with Basic Insurance, which you are enrolled in automatically unless you decline the coverage, and for which the government pays one-third of the premium cost. Then I wrote about Option A (Standard Optional Insurance) and Option B (Additional Optional Insurance). While you pay all of the premiums for optional insurance, the government has negotiated lower premium rates than if you tried to purchase that coverage from a private insurer. To close out the series, I want to spend a little time explaining Option C (Family Optional Insurance).

If you are covered by Basic Insurance, Option C lets you purchase coverage 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 are willing to let the value of the coverage decrease by 2 percentage points 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.

Is Option C coverage a good choice for you? First, it depends on whether you have a spouse or any children who are under age 22. If you don’t, you should have stopped reading before you got this far. If you do have a spouse or children, it may be worth the cost, but only if you accept the fact that the sole purpose of Option C is to provide you with enough money to cover the bills you’d have to pay if one or more of your family members were to die before you do. The upper limit on Option C is just too low to do much else with it. Thus, if you need more insurance on your spouse and children, you’ll want to look elsewhere.

This concludes the series on Basic and Optional insurance. Next week, I want to fill you in on the circumstances under which an employee who isn’t covered by Basic FEGLI or one of its options can enroll or, if already enrolled, can increase that coverage.