Life Insurance for Federal Employees: Pros and Cons of FEGLI

Many US federal employees assume that Federal Employees Group Life Insurance (FEGLI) is the best plan available to them because they are automatically enrolled in the basic plan as soon as they get a job. Many even choose to add one of three additional coverage options (Options A, B, or C). But how do federal employees really know they’re getting the most affordable plan and the best coverage available? Have they fully weighed the pros and cons of the plans? Are they aware of the alternatives?

To help federal employees better understand the costs and benefits of FEGLI, we have listed the advantages and disadvantages of FEGLI. We hope this list will help federal employees decide whether or not FEGLI is the best plan for their family.

Advantages of FEGLI

  • Convenience – You are automatically enrolled in basic coverage, regardless of your age or health status. You don’t have to take a medical exam and you’re guaranteed coverage as long as you’re employed by the government and pay the premiums. Premiums are also automatically deducted from your paycheck, so you don’t have to worry about making payments.
  • Possibility to choose the amount of coverage – The basic plan covers your salary to the nearest thousand plus $2,000, but you can choose to add more coverage. Option A adds $10,000 to your coverage, and Option B lets you choose even more.
  • Family coverage – Option C allows you to cover your spouse and children in addition to yourself. Some other plans required you to have separate policies for each person.

Cons of FEGLI

  • Cost – Additional coverage options A, B, and C cost more than the basic plan, and these premiums increase as you age. Premiums for your spouse and children’s coverage are based on your age, not the age of your family members, so these costs also increase as you age. You’ll also have to pay an additional premium if you want to add accidental death and dismemberment insurance.
  • Coverage may be temporary – You will only be eligible while you work for the federal government or if you retire from your government position. If you choose to leave your job or are fired, you lose your FELGI coverage.
  • Lack of options – Although FEGLI does offer some options, it does not offer options such as whole life insurance, single premium whole life, or universal life insurance. These policies offer features and benefits that are not included in FEGLI plans.
  • Difficulty in increasing coverage – You can decrease your coverage amount at any time, but you can only increase it during open enrollment periods, through a physical exam, or with a “Qualifying Life Event.” The last open enrollment was almost 10 years ago in September 2004, so expecting these open seasons to increase your coverage is unexpected.
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