Federal Employees: FEGLI Life Insurance Analysis (2026)

Quick Answer

Federal Employees Group Life Insurance (FEGLI) provides up to 5x annual salary in life insurance coverage, automatically offered to federal employees with government subsidizing 1/3 of the cost. In 2026, basic coverage is $50,000 (free) + Option A/$10,000 ($15/month) + Option B/$25,000 ($30/month) + Option C (multiple of salary ~$30–$70/month depending on age). Most federal employees are underinsured; FEGLI alone is insufficient if you have dependents/debt. Calculate your need: sum of mortgage + children's education costs + final expenses + income replacement. If exceeding FEGLI limits ($500,000–$1,000,000 max), purchase supplemental private insurance ($25–$50/month for $500,000 policy). FEGLI is excellent as a base; use it, but assess additional need.

FEGLI Coverage Components (2026)

Basic Life Insurance

Coverage: $50,000 (automatically enrolled; you cannot refuse).

Cost: FREE (government fully subsidizes).

Who gets it: All federal employees.

Survivor benefit: $50,000 lump sum to beneficiary upon death.

Option A: Standard Additional Coverage

Coverage: $10,000 (you choose to add).

Cost: ~$14–$20/month (depends on age; increases with age).

2026 rates (approximate):

• Age 20–30: $14/month.
• Age 30–40: $17/month.
• Age 40–50: $25/month.
• Age 50+: $40–$60/month.

Total with basic: $60,000.

Option B: Additional Coverage

Coverage: $25,000 (you choose to add).

Cost: ~$30–$50/month.

2026 rates (approximate):

• Age 20–30: $28/month.
• Age 30–40: $35/month.
• Age 40–50: $50/month.
• Age 50+: $70–$100/month.

Total with basic: $75,000.

Option C: Family Coverage Multiple

Coverage: Multiple of your annual salary (1x, 2x, 3x, 4x, or 5x salary).

Cost: Varies by age and multiple chosen.

2026 rates (approximate, for 2x salary):

• $100,000 salary, 2x multiple = $200,000 coverage.
• Age 35–40: ~$40–$50/month.
• Age 45–50: ~$70–$90/month.
• Age 50+: ~$120–$150/month.

Total with basic: Basic ($50k) + Option C multiple.

Spouse Coverage (Optional)

Coverage: Offered if you elect Option C; spouse can have up to 50% of your Option C amount.

Cost: Separate premium.

2026 rates (approximate):

• Spouse coverage at 50% of your Option C: ~$20–$40/month.

Child Coverage (Optional)

Coverage: Automatic once you enroll in Option C; $10,000 per child (up to age 22, or 25 if full-time student).

Cost: No additional premium (included in Option C cost).

How Much Life Insurance Do You Need?

Calculation Method: Human Capital Approach

Formula: Mortgage balance + (Annual income × Years to retirement) + Children's education costs + Final expenses – Existing assets.

2026 Example:

• Mortgage balance: $300,000.
• Annual income: $100,000.
• Years to retirement: 25 (age 65).
• Income replacement (25 years): $100,000 × 25 = $2,500,000.
• Children's education (2 kids, $50k each): $100,000.
• Final expenses (funeral, etc.): $15,000.
• Total need: $2,915,000.
• Existing liquid assets: $200,000.
• Net life insurance need: $2,715,000.

By Family Situation

Single, no dependents:

• Need: $0–$50,000 (cover final expenses, outstanding debts).
• FEGLI basic ($50k): SUFFICIENT.

Single income earner, spouse + 2 children, mortgage:

• Need: $1,500,000–$2,500,000.
• FEGLI maximum (5x salary at $100k): $500,000. INSUFFICIENT.
• Recommendation: FEGLI + $1,500,000 supplemental private insurance.

Dual income, high earner, mortgage + kids:

• Need: Each spouse should have $1,000,000–$2,000,000.
• FEGLI alone: Insufficient for either spouse.
• Recommendation: Each spouse gets FEGLI maximum + $1,000,000–$1,500,000 private insurance.

High earner ($150,000+), multiple properties, significant estate:

• Need: $2,000,000–$5,000,000+.
• FEGLI maximum (5x salary): $750,000. INSUFFICIENT.
• Recommendation: FEGLI maximum + $2,000,000–$3,000,000 private insurance (or more).

FEGLI Options Selection Recommendation

Younger Federal Employees (Age 25–40, No Kids)

Recommended election:

• Basic ($50k): Automatic, FREE.
• Option A ($10k): ~$15/month.
• Option B ($25k) OR Option C (2x salary): Choose one.

Total coverage: $85,000 (Option A + B) or $200,000+ (Option C at 2x).

Why Option C: If you plan to have family, 2x salary gives flexibility.

Mid-Career (Age 40–50, Family + Mortgage)

Recommended election:

• Basic ($50k): Automatic, FREE.
• Option C (3x–5x salary): $200,000–$500,000+.
• Spouse coverage: 50% of Option C.
• Child coverage: Automatic with Option C.

Total coverage: $200,000–$500,000 (FEGLI) + supplemental insurance.

Why: Covers mortgage, education, income replacement partially. Supplemental insurance bridges gap.

Pre-Retirement (Age 55–62)

Recommended election:

• Basic ($50k): Automatic, FREE.
• Option C (2x–3x salary): $200,000–$300,000.
• Reduce or eliminate once mortgage paid and children independent.

Total coverage: $200,000–$350,000.

Why: Protecting remaining mortgage, estate taxes, final expenses.

FEGLI Portability (Post-Separation)

Portability Eligibility

If you separate from federal service, FEGLI coverage can continue for 31 days (without underwriting).

After 31 days, you can convert FEGLI to individual private policy with same carrier (though premium increases significantly; rates based on age at separation).

Conversion Costs

Example: Age 50, converting $500,000 FEGLI to private policy.

• FEGLI premium (age 50): ~$120–$150/month.
• Private policy premium (age 50, $500,000): ~$100–$150/month (depends on carrier, health).
• Often similar or slightly higher.

Advantage: No medical underwriting (guaranteed issue).

Disadvantage: Private policy may be more expensive long-term than FEGLI group rate.

Supplemental Private Insurance: When Needed

Cost of Supplemental Term Life Insurance (2026)

Rates vary by carrier, health, lifestyle (smoker vs. non-smoker, risky hobbies).

Should You Buy Supplemental?

Calculate your gap:

• Total need (from earlier calculation): $2,715,000.
• FEGLI maximum (assume 5x $100k salary): $500,000.
• Gap: $2,215,000.

Cost to close gap:

• $1,500,000 supplemental term (20-year): ~$40–$60/month.
• Monthly cost: $50/month = $600/year.

Is it worth it?

• Yes, if you have dependents and significant income.
• Death at age 50 without supplemental insurance leaves family $1.5M short.
• Supplemental insurance costs ~$600/year; catastrophic risk cost is $2M+.

Recommendation: If FEGLI alone is insufficient, buy supplemental.

Common FEGLI Mistakes Federal Employees Make

❌ Assuming FEGLI is Sufficient

Thinking $500,000 FEGLI covers all needs when actual need is $2M+.

✅ Better: Calculate actual need; use FEGLI as base + supplemental.

❌ Choosing Option A Only (Too Low)

Selecting only $10k Option A coverage, thinking it's adequate.

✅ Better: Choose Option B or C for substantial coverage (at minimum, 2x salary).

❌ Not Updating Beneficiary

Listing ex-spouse as beneficiary; they receive payout after divorce.

✅ Better: Update beneficiary within 30 days of major life change (marriage, divorce, children).

❌ Forgetting Portability Window

Separating from federal service, not converting FEGLI within 31 days → Coverage lapses permanently.

✅ Better: If separating, convert to private policy immediately (within 31-day window).

❌ Not Reviewing Coverage Needs Annually

Life circumstances change (kids born, mortgage paid, salary increased) but coverage stays same.

✅ Better: Review coverage every 3–5 years; adjust if significant change.

Step-by-Step FEGLI Planning Checklist

Step 1: Calculate your life insurance need using method above (mortgage + income replacement + education + final expenses – assets).

Step 2: Log into your federal benefits portal (Benefits.gov or agency portal).

Step 3: Review current FEGLI elections. Note all options selected and costs.

Step 4: Determine if FEGLI covers your need:

• If need <$500k: FEGLI sufficient (elect basic + Option A/B).
• If need >$500k: FEGLI insufficient; need supplemental.

Step 5: If supplemental needed:

• Get quotes for term life insurance ($500k–$1.5M, 20–30 year term).
• Compare costs: FEGLI vs. private insurance rates.
• Apply for private policy (medical underwriting required).

Step 6: During Federal Benefits Open Season (November), update FEGLI elections.

• Increase Option C if need increased.
• Add spouse/child coverage if applicable.
• Update beneficiaries.

Step 7: Download beneficiary form (SF 1763 or SF 3104). Update beneficiary to desired person/trust.

Step 8: Notify family of your coverage amount and beneficiary information.

Step 9: Store life insurance policies (FEGLI enrollment confirmation + private policy) in safe deposit box or fireproof safe.

Step 10: Use /products/net-worth-calculator to track estate value. Review coverage needs every 3–5 years.

Step 11: If leaving federal service, convert FEGLI to private policy within 31-day window (if desired).

Step 12: Coordinate FEGLI + supplemental insurance with your will/estate plan.

FAQ

Q: Can I cancel FEGLI and get a refund?

A: You can decline FEGLI (except basic $50k, which is automatic). If you cancel, no refund of premiums paid. If you later want to re-enroll, you may face medical underwriting. Recommendation: Keep FEGLI enrolled.

Q: What if I'm diagnosed with a serious illness after leaving federal service?

A: If you convert FEGLI to private policy within 31 days, it's guaranteed (no medical underwriting). If you wait beyond 31 days, you'll need medical underwriting, which might result in denial/higher rates if seriously ill.

Q: Can FEGLI be assigned to pay off debt?

A: No. FEGLI pays as lump sum to beneficiary. You can designate beneficiary as an estate/trust, which can then pay debt, but FEGLI itself isn't "ear-marked" for specific debts.

Q: How much is the government subsidy of FEGLI?

A: Government pays 1/3 of the FEGLI cost (for basic + options). You pay 2/3. This is an excellent deal; private insurance would cost 2–3x more.

Sources:

• Office of Personnel Management. "Federal Employees Group Life Insurance (FEGLI) Handbook."
• FEGLI.gov. "Coverage Options and Rates."
• LifeHappens.org. "How Much Life Insurance Do I Need?"
• LIMRA. "Life Insurance Needs Analysis."