The basic coverage you carry into retirement under the Federal Employees Group Life Insurance (FEGLI) program is determined by your pay at the time of retirement. If you fulfill all of the following conditions, you are qualified to continue basic insurance:
- You are entitled to an immediate annuity to begin collecting retirement benefits within 31 days after your separation. It is possible to re-enroll in FEGLI when you file for retirement benefits if you separate at your minimum retirement age with at least ten years of creditable service and opt to postpone your application to avoid the age penalty for FERS employees.
- Before your retirement, you had been covered for at least five years or since the first time you were able to enroll.
- Your life insurance policy has not been converted or, if it has been converted, the policy has been canceled.
- You must get a Notice of Conversion Privilege from your employer’s office if your insurance coverage expires (SF 2819). You may be asked specific health-related questions when applying for a lower premium, but no physical test is necessary. The Office of Personnel Management (OPM) has authorized a list of insurance firms that can be used to offer an individual policy. Individual plans can be purchased for family members insured by FEGLI Option C after your death.
- Form SF 2818, Continuation of Life Insurance Coverage, will be used after you retire to make your decisions about your life insurance. OPM deducts the cost of your FEGLI premiums from your retirement income every month.
Retirement possibilities for FEGLI
Basic:
75% reduction: The Basic coverage stays in place until your last day of work, but after you turn 65 (or retire if you’re already over 65), it goes down by 2% per month until it’s worth 25% of what it was. When the decrease begins, you no longer have to pay premiums ($0.3467 for $1,000 of coverage each month).
50% reduction: You keep your Basic coverage until your last day of work, but after age 65 (or when you retire if you’re already over 65), it goes down by 1% per month until it’s worth only half of what it was. Basic premiums ($0.3467) and extra premiums (0.75% per $1,000 coverage) are paid in advance until the decrease begins. You must continue to pay extra premiums after the initial payment. This option can be canceled anytime and returned to the 75% option.
No reduction: You keep the Basic coverage in place on your last day of work. A monthly payment of $2.25 per $1,000 of coverage is required if you were under 65 when you retired and did not pay the Basic premium ($0.3467). When you reach the age of 65 and become a retired person, you must pay an additional $2.25 per month to ensure that your Basic FEGLI is not reduced. At any point, you may go back to the 75% option and cancel this one.
Option A
You’ll lose 2% of your $10,000 death benefit each month until it drops to $2,500 when you reach retirement age, whichever comes first. Once you reach the age of 65, you no longer have to pay any insurance premiums.
Option B (Additional) and Option C (Family):
Full reduction: At age 65 or retirement, whichever comes later, coverage under Option B or Option C will decrease by 2% of the amount before retirement every month for 50 months, after which coverage will end.
It is possible for retiring employees to maintain coverage on an unreduced basis and continue to pay premiums after age 65 if they so wish. The complete decrease is available to annuitants who chose unreduced coverage at the outset. However, they are unable to re-enroll.
Option B and Option C coverage can be reduced in full for some multiples of Option B and Option C, while the remainder of your coverage remains the same.
Example
Take an example of someone retiring at age 62 with an annual salary of $85,300, with a 75% reduction election, plus five multiples of Option B (full reduction for four multiples and no reduction for one multiple), and five multiples of Option C (no reduction for all multiples).
Until age 65, the monthly premium is $0.3467 x 88 ($30.50) because of a decrease of 75%. At 65, the $88,000 in coverage drops to $22,000, a reduction of $1,760 a month. You won’t have to pay for it for the rest of your life.
Option A: a $10,000 policy with a monthly premium of $13 from retirement to age 65, after which there is no further payment. At 65, the monthly premium drops by $200 until it reaches $2,500. You won’t have to pay for it for the rest of your life.
Option B: $86,000 x 5 = $430,000 coverage at retirement. It was decided to reduce the amount of money allocated to each of the four multiples by 2% every month until the total amount allocated to each of the four multiples was zero ($344,000) and to leave one multiple alone ($86,000 remains as long as one multiple is not reduced). For the first $1,000 of coverage, the monthly premium is $0.867; for the second $1,000, the monthly premium is $1.040; for the third $1,000 of coverage, the monthly premium is $1.863; for the fourth $1,000 of coverage, the monthly premium is $3.624; and for the fifth $1,000, the monthly premium is $6.24; for the sixth $1,000 of coverage, the monthly premium is $3.624.
Option C: $5,000 x 5 = $25,000 coverage for spouse will continue unchanged at $26.35 per month until age 65, then $30.65 per month until age 70, $41.50 per month until age 75, $64.40 per month until age 80, and $84.50 per month as long as there is no reduction of all five multiples.
You can cancel FEGLI coverage before or after retirement. Retirement, on the other hand, is a one-way trip out. In the future, you won’t be able to get your insurance back. Even if you remarry after retirement, you’ll still be covered under Option C’s family coverage.
Contact Information:
Email: [email protected]
Phone: 3037587400
