What Is FEGLI? | Life Insurance Loans for Federal Employees

by Life Credit | May 2, 2015 | Financial Assistance for Cancer Patients

FEGLI stands for Federal Employees’ Group Life Insurance and is one of numerous government programs set in place for federal workers. As an eligible federal employee, a person is automatically enrolled for this basic insurance program.

Everyone should have life insurance in case of a fatal incident, and federal personnel are entitled to have several options in choosing the amount of life insurance that is right for them. FEGLI offers three types of optional insurance, including a standard amount of $10,000; an annual option that is offered in an amount from one to five times the annual rate of a basic pay after rounding salary numbers up to the next even $1,000; and a family selection, which gives one to five multiples of coverage for a spouse and eligible dependent kids.

There are numerous benefits to have a FEGLI policy, including group rates and convenient payroll deductions. In the event of a financial emergency, it is also possible to take out a FEGLI loan. The loan doesn’t require any payments to be made and the repayment is handled from the proceeds of a death benefit. Thus, FEGLI policies not only help loved ones of the deceased, but it can also help you in times of financial crisis.

To learn more about borrowing from FEGLI, give us a call at 1-888-274-1777.

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→ Borrow Against Life Insurance Guide → Compare All Your Options → Cancer Patient Financial Resources → How Living Benefit Loans Work → Check If You Qualify → Policy Eligibility Guide

Understanding FEGLI Coverage Levels

Federal Employees' Group Life Insurance (FEGLI) provides multiple layers of coverage that many federal workers don't fully understand:

Basic Insurance: Your annual salary rounded to the nearest $1,000, plus $2,000. If you're under 45, you receive an Extra Benefit that can double this amount. The government pays one-third of the premium.
Option A (Standard): An additional $10,000 in coverage, fully employee-paid.
Option B (Additional): 1x to 5x your annual salary. This is the most valuable optional coverage and is fully employee-paid at group rates.
Option C (Family): Coverage for your spouse ($5,000-$25,000) and dependent children ($2,500-$12,500 each).

For a GS-13 Step 5 employee earning $107,000 with Basic plus 5x Option B, the total death benefit could exceed $640,000. That's a substantial financial asset — one you can access through a Living Benefit Loan.

📚 Related In-Depth Guides

FEGLI vs. a Living Benefit Loan

FEGLI's built-in Living Benefit feature only pays up to $5,000 and requires a terminal illness with life expectancy of 9 months or less. A Living Benefit Loan, by contrast, lets you access up to 50% of your total death benefit — potentially over $300,000 — with funding in as few as 3 business days and no credit check.

Read the complete FEGLI borrowing guide →

What Happens to FEGLI in Retirement?

Federal retirees can keep FEGLI coverage, but benefits reduce starting at age 65. Basic coverage drops by 2% per month to 25% of its original value (unless you elected "No Reduction"). Option B coverage reduces to zero. This makes timing critical — if you need to access your FEGLI value, acting before age 65 maximizes your options.

Frequently Asked Questions

Can I borrow against my FEGLI policy?

Not through a traditional loan (FEGLI has no cash value). But a Living Benefit Loan borrows against the death benefit — FEGLI Basic and Optional coverage both qualify with $75,000+ total.

How fast can I get funds?

A Living Benefit Loan funds in as few as 3 business days. No credit check required.

Will my beneficiaries still receive a death benefit?

Yes. They receive the remaining death benefit after the loan is repaid.

Ready to Explore Your Options?

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