FEGLI is an affordable — potentially free — group term life insurance exclusive to federal employees. Most people automatically sign up for a policy once they start working for the government without giving it much thought because of its low cost.
Alternatively, private term life insurance policies are available from insurance companies to anyone, whether a federal employee or not. They may cost more, but they also comprise more robust policies with extensive coverage. If you don’t have dependent beneficiaries, FEGLI may offer enough coverage. Otherwise, supplementing FEGLI with private term life insurance may best meet your household’s specific insurance needs.
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What Is the Difference Between FEGLI & Private Term Life Insurance?
FEGLI is exclusively available to federal employees, and the coverage amount is low. They can keep their policy for life unless they resign, in which case the coverage will only continue for 31 days, but they can convert it to an individual policy.
Meanwhile, term life insurance is widely available to everyone. But the monthly premium may be much higher than FEGLI. However, private policies provide higher coverage per dollar and more extensive benefits.
FEGLI vs. Term Life Insurance
- A term life insurance policy.
- Exclusive to federal employees and their families.
- Monthly premiums may cost far less than term life rates.
- May have a higher premium but provides more coverage per dollar.
- Policies are customizable.
- Any insurable person can sign up.
FEGLI is affordable, and eligible employees should take advantage of it — it’s a decent, cheap starter policy — but it rarely provides adequate coverage, especially for breadwinners. But FEGLI can supplement your private term life insurance coverage.
Whether you have FEGLI or not, we advise looking into term life insurance as your coverage needs grow. For instance, let’s say you get married. Instead of depending solely on FEGLI, a term life insurance policy can provide enough coverage to support your spouse or family should you pass away. These benefits can be used to pay off a mortgage and any outstanding debts.
Comparing FEGLI and Private Term Life Insurance
Feature | FEGLI | Private Term Life Insurance |
---|---|---|
Availability | Federal employees automatically | Private term life insurance is available |
Cost | USPS workers get FEGLI for free, | Private term life insurance may cost |
Death | FEGLI basic coverage has a death | Private term life insurance provides |
Length of | You can keep your FEGLI policy | Term life insurance can vary on policy |
Cash Value | FEGLI doesn’t accumulate cash | Private term life insurance policies have |
Rider | FEGLI includes, at no additional | The private term life insurance riders |
Federal employees are automatically enrolled in their division’s FEGLI plan unless they choose to decline the benefit. You get the basic insurance amount we mentioned above. However, you can bolster your FEGLI basic plan with optional coverage if you want extra coverage. The three options are as follows:
- Option A - Standard: A straightforward option that gives you an additional $10,000 in death benefit.
- Option B - Additional: Option B gives your beneficiaries an additional death benefit that’s one to five times your basic pay, rounded up to the next thousand.
- Option C - Family: The family plan insures a spouse and dependent children for $5,000 and $2,500, respectively. Also, you can quintuple each coverage.
Which One Is Better: FEGLI or Private Term Life Insurance?
Is FEGLI worth it? Contrary to popular belief, you don’t necessarily have to choose between FEGLI and term life insurance from a private company. You can get both if needed.
As we mentioned, FEGLI is term life insurance for federal employees. Although it’s affordable, it doesn’t provide much coverage. Breadwinners with multiple dependents that may need help paying for college tuition or a mortgage will need more robust, extensive coverage, which you can achieve with private term life insurance. Explore your FEGLI vs. private term life insurance options to see whether having both is in your best interest.
FEGLI basic insurance is best for:
- Federal employees (they are automatically enrolled)
- Breadwinners who need final expenses covered
- People who’ll only need FEGLI for short-term expenses
- Federal employees who need affordable insurance
FEGLI optional insurance is best for:
- Federal employees that need more coverage than the basic FEGLI policy
- FEGLI policyholders that want to insure their spouse and children
- Employees who can spend more on insurance to get better death benefit coverage
Private term life insurance is best for:
- Breadwinners that have outstanding debts or planned expenses like college tuition to pay for
- Parents with young kids
- Breadwinners shouldering large, long-term household expenses like a mortgage
- FEGLI policyholders who want additional coverage
Have you decided to supplement your coverage with private term life insurance? To jumpstart your research, MoneyGeek has analyzed the best term life insurance providers based on their affordability, financial stability, product offerings and customer satisfaction. Alternatively, check out the cheapest term life insurance policies if your priority is to save money.
Compare Life Insurance Rates
Ensure you are getting the best rate for your insurance. Compare quotes from the top insurance companies.
Frequently Asked Questions
If you aren’t sure about FEGLI vs. term life insurance or want to know more about each, review our frequently asked questions below.
About Mark Fitzpatrick

sources
- National Institutes of Health. "FERS Separation (Non-Retirement)." Accessed October 21, 2022.
- U.S. Office of Personnel Management. "Federal Employees’ Group Life Insurance (FEGLI)." Accessed October 20, 2022.
- U.S. Office of Personnel Management. "FEGLI Premium Overview." Accessed October 20, 2022.