If you are in the unfortunate situation of qualifying for a “living benefit” under the Federal Employees Group Life Insurance program and are deciding whether to take the benefit before or after retirement, be aware that the policy differs somewhat between active employees and retirees.
You may elect to receive a lump-sum living benefit payment from FEGLI if you are terminally ill and have a documented medical prognosis that you are not expected to live more than nine months.
Active employees may elect a full living benefit of the total amount of their Basic FEGLI insurance or a partial benefit in multiples of $1,000. Annuitants may only elect a full lump-sum payment equal to their Basic life insurance amount; annuitants cannot elect a partial living benefits payment; that option is available only to employees.
If you elect living benefits after retirement, no Basic life insurance will be payable after your death. The Office of Personnel Management will stop withholding any Basic life insurance premiums from your monthly annuity. If you elect living benefits before you retire, the amount of Basic life insurance payable after your death and the premiums the OPM withholds from your annuity depend upon the amount of living benefits you received before retirement.
Notes: If you have “assigned” your life insurance coverage, neither you nor the assignee may elect living benefits. An election of living benefits has no effect on the amount of any Optional life insurance you may have. OPM will continue to withhold any premiums for Optional insurance.
See also, FEGLI life insurance coverage after retirement at ask.FEDweek.com