If the U.S. government employs you or your spouse, you should have access to a potentially valuable benefit—the Federal Employees' Group Life Insurance (FEGLI) program. There are several tiers of FEGLI coverage based on income, family size and needs. What information is important to understanding FEGLI and managing your potential benefits? Here are a few things federal employees and their immediate family members should know about the FEGLI program.
What is FEGLI?
Most federal employees have basic life insurance under FEGLI. This life insurance is equal to the employee's actual rate of annual basic pay, plus either $2,000 or $10,000, whichever is more.1 For employees under the age of 45, double life insurance benefits are available up until the employee's 36th birthday, with a 10% reduction in double benefits each year until the employee turns 45.
FEGLI also has optional insurance coverage. This optional coverage is either $10,000 or between one and five multiples of the employee's pay. Another option for optional coverage includes family coverage. This coverage insures an employee's family members with between one to five multiples of the employee's salary.
Finally, FEGLI offers accidental death and dismemberment benefits to federal employees. The accidental death benefits equal the amount of basic death benefit insurance. They may also provide an additional $10,000 of coverage for those who opted in for the higher tiers of FEGLI optional insurance coverage. Dismemberment benefits may be paid if the federal employee loses a limb or loses eyesight in one or both eyes.
Where Do FEGLI Benefits Go?
Life insurance benefits payable under FEGLI are on top of any Social Security, Civil Service Retirement System, Federal Employee Retirement System survivor benefits or workers' compensation payments. They are paid in a specific order, depending on the surviving relatives of the employee. Benefits pay according to this order:
- The designated beneficiary (or beneficiaries); then
- The surviving spouse
- Any child or children of the decedent (or descendants of the decedent's deceased children)
- Any surviving parents of the decedent
- The estate administrator or executor
- The next of kin in accordance with the state's intestate statutes.
Each state has its own rules providing who inherits from whom, which might differ from the list above. If you have a question about FEGLI coverage, your financial professional may provide guidance and let you know which benefits are appropriate to consider.
This material was created for educational and informational purposes only and is not intended as insurance advice. If you are seeking insurance advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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