Understanding FEGLI and Alternative Life Insurance Plans

FEGLI is short for the Federal Employee Group Life Insurance plan that is offered to all Federal Employees when they hire on as part of their employee benefits plan.  The problem with FEGLI coverage is that most federal employees take out the coverage without understanding everything about the plan and how it is designed.  Many go years of employment before they realize the issues inside of the FEGLI plan, often times then it is too late to make changes that would have otherwise saved them tens of thousands of dollars or provided them with a cash value accumulation they could have otherwise used in retirement time.

First, it is important to understand that your FEGLI coverage is a group life insurance plan.  By definition, group life insurance plans are designed to provide low cost term insurance to employees ONLY while they are working inside the employer group.  As you get older, the cost of the group term insurance increases as the employee ages.  Once an employee leaves the employer, the group insurance may be portable in certain cases however the cost to take the coverage with the departing employee is very expensive! This is purposefully designed to protect the premiums of the entire group and force older employees (those that may be more likely to die) off the plan in order to prevent the insurance carrier from paying sizable death claims.

FEGLI coverage is broken into four (4) parts as follows:

1.)  Basic Coverage:  Round your salary up to the nearest thousand, and add $2,000 to that to calculate your base.  Your coverage amount is calculated with your base and age as follows:

If under 36 years old = multiply your base by 2
If over…
36 = multiply your base by 1.9
37 = multiply your base by 1.8
38 = multiply your base by 1.7
39 = multiply your base by 1.6
40 = multiply your base by 1.5
41 = multiply your base by 1.4
42 = multiply your base by 1.3
43 = multiply your base by 1.2
44 = multiply your base by 1.1

45 or above = just use your base amount

2.)  Option A – Standard: An extra $10,000 of coverage

3.)  Option B – Multiples of 1, 2, 3, 4, or 5 times your salary, after it has been rounded up to the nearest thousand

4.)  Option C – Family Plan: Coverage on spouse and eligible dependent children

Because FEGLI does not attempt to provide a one-stop solution to all life insurance needs for federal employees, it’s important for folks to realize that there may be gaps in their FEGLI insurance coverage for 5 reasons:

1)  FEGLI is not comprehensive
2)  FEGLI may cause complacency
3)  The cost of FEGLI increases all the time
4)  FEGLI is not a practical way to own insurance into retirement
5)  Most people do not understand their coverage!

So how much insurance do you need?  How long do I need the insurance for?  How can I see alternative quotes and life insurance options?  We can help by providing you:

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  • Your current FEGLI coverage and rates along with future cost analysis
  • Professional guidance on how much life insurance is really needed and for how long it’s needed for
  • Alternative life insurance quote options from our access to over 26 life insurance carriers


To learn more about FEGLI, or get started on your own personal life insurance needs analysis, please contact us today at (800) 300-6223.  Our Federal Retirement Planning Division is here to help solve all of your retirement needs and goals!