Federal Employees’ Group Life Insurance (FEGLI) vs. Term Life Insurance: What’s The Difference & Which One Should You Get?

What is FEGLI? FEGLI stands for Federal Employees’ Group Life Insurance. It provides standard term life insurance benefits at a discounted group rate to federal employees. FEGLI policies don’t accumulate cash value. The policy only pays benefits if you or your beneficiary die or experience dismemberment.

FEGLI costs less than other life insurance policies. However, breadwinners should invest in a term life insurance plan in addition to FEGLI since it provides minimal protection or financial support.

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Last Updated: 11/14/2022
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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

FEGLI
  • A term life insurance policy.
  • Exclusive to federal employees and their families.
  • Monthly premiums may cost far less than term life rates.
Private Term Life Insurance
  • 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
    qualify for FEGLI. Upon resignation,
    FEGLI must be converted to a
    regular policy, or else coverage
    stops.

    Private term life insurance is available
    to all. Whether or not you can get a
    policy depends on your preferred
    insurer.

  • Cost

    USPS workers get FEGLI for free,
    while other federal employees can
    sign up at a very low, affordable
    bi-weekly rate that their salary
    determines
    .

    Private term life insurance may cost
    more than FEGLI, depending on age,
    but you can customize a policy to
    provide exponentially more coverage.

  • Death
    Benefit

    FEGLI basic coverage has a death
    benefit equal to your annual salary
    (rounded up to the nearest
    thousand) plus $2,000 (an extra
    benefit that doubles the amount
    applies to those 35 and under) or
    $10,000. You can also choose to
    pay for optional coverage, such as
    an additional $10,000, extra
    coverage of one to five times your
    salary or family coverage.

    Private term life insurance provides
    more coverage per dollar. Most insurers
    would have no problem insuring you for
    hundreds of thousands or millions as
    long as you’re eligible for the policy and
    can afford the premium.

  • Length of
    Coverage

    You can keep your FEGLI policy
    even after retirement and at
    potentially no cost to you at that
    time. Or you can convert your
    FEGLI policy into a whole life
    insurance product.

    Term life insurance can vary on policy
    length. For example, you may choose a
    10-year policy or a 30-year policy. You
    may be able to convert a term life policy
    into a whole life policy or extend its term
    — it’s best to discuss your options with
    an insurance agent.

  • Cash Value

    FEGLI doesn’t accumulate cash
    value.

    Private term life insurance policies have
    no accumulated cash value.

  • Rider
    Eligibility

    FEGLI includes, at no additional
    cost, accidental death and
    dismemberment coverage.
    Consult your employer about
    whether other FEGLI riders are
    available, although it might make
    more sense to put your funds
    toward a more comprehensive
    private term life insurance policy.

    The private term life insurance riders
    you can get will depend on your insurer.
    However, some common riders to
    expect are the waiver of premium,
    guaranteed insurability and accidental
    death and dismemberment.

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FEGLI OPTIONAL INSURANCE

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.

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    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
  • This is an icon

    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
  • This is an icon

    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
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MONEYGEEK EXPERT TIP

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.

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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 the Author


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Mark Fitzpatrick is a senior content manager with MoneyGeek specializing in insurance. Mark has years of experience analyzing the insurance market and creating original research and content. He graduated from Boston College with a Bachelor of Arts and Johns Hopkins University with a Master of Arts.


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