An overview of the cost and rules surrounding the family optional life insurance, known as “Option C,” offered by the Federal Employee Group Life Insurance (FEGLI) Program
Most feds are familiar with FEGLI Basic as all eligible federal workers are enrolled automatically when first hired. The Basic insurance is also the only component of FEGLI where the government will chip in on the cost by paying 1/3 of the premium, and also the only coverage from which living benefits can be withdrawn, if needed. The other three additional options are known as Standard Optional Insurance (option A), Additional Optional Insurance (option B), and Family Optional Insurance (Option C). While any part of FEGLI can be dropped at any point during a federal career, or in retirement, enrolling or re-enrolling in the life insurance program is more complicated. This article will review how much FEGLI option C costs, and what additional benefits it provides.
Only for Family
Most importantly, this optional family life insurance covers immediate family members only. This includes the federal employee’s spouse and any dependent children under the age of 22 who live in the same household in a “parent-child relationship.” The covered dependent can be a natural, adopted, step, or foster child, but children do lose their eligibility if they get married. If a child is 22 or older, they can still be covered if debilitated by a condition that makes them unable to support themselves independently. To sum up Option C, it should only be considered by federal employees who have a spouse and/or children who live with them. It should also be understood what benefits are to be received in the tragic event that a covered family member passes away, and how much the optional insurance will cost.
Option C Benefits
Along with Options A and C, there is also FEGLI Option B. A federal employee or annuitant covered by this FEGLI option has the following life insurance benefits on top of their Basic benefits: dollar amount equal to their “SF-50” salary after applying one of the following multipliers: x1, x2, x3, x4, or x5. The numerical product that results from multiplying the annual salary by the chosen multiplier is then rounded up to the nearest $1000 and then another $1000 is added to that.
|Multiple||Amount of Death Benefit (Spouse)|
So long as they are eligible dependents, any number of children can be covered. Like the spouse’s insurance, 1 to 5 multiples can be chosen, except the multiples are in $2,500 increments. One rule to be aware of is that whatever multiple is chosen for a spouse, the same multiple has to be chosen for any children that are covered.
|Multiple||Amount of Death Benefit (Children)|
Like all FEGLI premiums, the age of the federal employee or retiree reflects the price. The younger someone is, the cheaper FEGLI costs for them. The premiums are paid biweekly for active employees and monthly for federal retirees. However, if age 65 or over upon retirement, one can elect to stop paying for FEGLI Option C and some coverage will remain in place. The benefit amount will decrease, though, by 2% every month until hitting zero. If there is still coverage in place after 50 months, the life insurance benefit is altogether dropped regardless.
|Age Range||Option C Premium, biweekly||Option C Premium, monthly|
|34 or younger||$0.20||$0.43|
|80 or older||$7.20||$15.60|
From the FEDZONE, by Ed Zurndorfer: Insurance Needs and Options for Federal Employees
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.