Federal Employees’ Group Life Insurance (FEGLI) is a convenient benefit — payroll-deducted, no medical exam required for Basic coverage, and available the moment you're hired. But convenient doesn't always mean sufficient, and many federal employees don't realize how thin their FEGLI coverage really is until it's too late to easily fix.
FEGLI Basic coverage equals your annual basic pay, rounded up to the next $1,000, plus an additional $2,000. For most financial planners, the recommended coverage for someone with dependents is 8 to 10 times annual income — meaning Basic alone leaves a substantial gap for anyone with a mortgage, young children, or a spouse who depends on their income.
FEGLI Option B (multiples of your salary) and Option C (family coverage) can add meaningful protection, but their premiums are age-banded and increase every five years. By your early 60s, some employees find their Option B premiums have tripled or quadrupled compared to their 30s and 40s — and worse, if you keep coverage into retirement, it begins reducing at 2% per month starting at age 65 unless you elect (and pay for) a No Reduction option.
Many federal employees are surprised to learn that FEGLI Option B and C coverage automatically begins reducing at age 65 in retirement unless you specifically elect otherwise — and full continuation comes at a steep premium. This is one of the most common places where retirees lose coverage they assumed they still had.
Private term life insurance, purchased while you're still healthy, often costs significantly less than aging FEGLI options for the same amount of coverage — and the rate is locked in for the full term, regardless of age. For many federal employees, a combination of a smaller FEGLI Basic election plus a private term policy provides more coverage for less money over the long run.
FEGLI isn't a bad benefit — it's a starting point. The mistake is assuming it's enough on its own. A quick review of your current elections against your family's actual needs often reveals a meaningful gap, and closing that gap early — while you're younger and healthier — is almost always more affordable than waiting.
A GRS insurance specialist can review your current FEGLI elections and identify affordable ways to close the gap.
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