Federal Employee Group Life Insurance - FEGLI
Federal employee group life insurance - FEGLI came into force on August 28, 1954. It is the largest employee group life insurance program covering over 4 million Federal employees, retirees and their family members. There are two types of federal employee group life insurance schemes- Basic and Optional.
Every Federal employee is automatically eligible for basic group life insurance. The cost of the basic insurance is shared between the individual and the government. The government pays 1/3 of the total cost and individuals bear 2/3 of the total coverage. In basic group life insurance or group term life insurance, individual's age does not affect the cost of insurance. Employees can select either full or partial living benefits on their group life insurance or group term life insurance schemes. Living benefits are available only for basic group insurance schemes. Optional insurance schemes do not provide this coverage. A federal employee can opt for optional insurance if he already possesses basic insurance and his periodic pay after all other deductions are sufficient to cover full costs. There is no government contribution towards optional insurance. The cost of insurance will change from time to time and will be announced by the office of personnel management. The office of Personnel Management has the overall responsibility for administration of the Federal Employee Group Life Insurance (FEGLI) Program. Their responsibilities include:
- Processing and paying claims
- Determining eligibility for living benefits
- Determining eligibility to cancel a waiver of insurance based on medical evidence
- Process requests for conversion
The policy is offered to all government employees. There are three kinds of coverage.
- Group term without a medical exam
- Accidental death and dismemberment insurance which provides double indemnity protection
- A living benefit for the terminally ill
According to the new 2004 Federal Employee Group Life Insurance (FEGLI) premiums and age bands, the cost of basic coverage has been reduced to about 1% per $1000 coverage. The government's share of cost has been reduced by half a percent per $1000.The cost is the same for anybody and there are no age bands from basic coverage. Extra coverage is given to those above the age of 45 and above, without much additional cost. From 36 years onwards, the multiplicative factor for the amount of basic insurance usually declines by 0.1% each year until it reaches 1% for employees that are 45 years and older. One disadvantage is that the cost of FEGLI increases each year till 80 years of age and it also builds up no cash and loan value or even paid up extended insurance. In the event of death, it might be intended as a form of immediate protection. If the coverage is extended then the incurring costs are very high, with decreasing face value amounts.
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