Understand federal employee benefits and beneficiaries: FEGLI group life insurance, Thrift Savings Plan (TSP), and divorce. Learn key beneficiary facts.
This article aims to provide clarity for several key topics regarding benefits payable upon death to the surviving family members and beneficiaries of federal employees and retirees. These include:
Need to start planning for retirement? Attend a Free Federal Retirement Webinar.
For federal employees and retirees, the Federal Employee Group Life Insurance (FEGLI) program offers a structured safety net, one that can provide meaningful financial support to loved ones in the event of death. Here’s a clear breakdown of how much coverage each individual policy provides, how beneficiary designation works, and a timeline for when benefits are paid.
In order to have any optional FEGLI policies, employees must be enrolled in FEGLI Basic.
Enrollment in optional insurance is not automatic. There are three types of optional insurance plans and the cost of any optional insurance from the federal group term life insurance program is dependent on age and can be canceled at any time.
| Forms of Optional Insurance | Coverage Amount | Cost of Insurance Option | Notes | In Retirement |
| Option A (Standard) | Provides an additional $10,000 in life insurance. | Premiums are age-based and fully paid by the employee. | Ideal for those seeking a modest supplement to Basic coverage, especially helpful for final expenses or small debts. | Like with Basic, reduced coverage (25%) can be kept after retiring at no additional cost |
| Option B (Additional) | Lets you choose 1 to 5 multiples of your annual basic pay. | Premiums increase with age and are fully paid by the employee. (Very expensive with older age) | This is the most customizable option, allowing employees to scale coverage based on family size, debt, or financial goals. | Must be kept in full or completely dropped when retiring from federal service. |
Option C (Family) | Provides life insurance for your spouse and eligible dependent children: Spouse: $5,000 per multiple (up to 5 multiples, $25,000 max) / Child: $2,500 per multiple (up to 5 multiples, $12,500 max per child) | Premiums are based on your age and number of multiples selected. | Designed to help cover funeral costs or short-term financial needs for surviving family members. | In some cases, a refund of FEGLI Option C premiums can be paid back if no eligible family members were being covered at the time. Coverage for your spouse can continue in retirement, and until child reached age 22 (unless disabled) |
Get a Free FERS Handbook when you subscribe to our Newsletter.
When a federal employee or retiree covered under the FEGLI insurance program dies, the death benefit is paid to the person or entity designated as the beneficiary on the insured’s FEGLI records.
To claim the FEGLI death benefit, the beneficiary must complete Form FE-6 and submit it along with a certified copy of the death certificate. Upon the death of the insured, the Office of Federal Employees’ Group Life Insurance (OFEGLI) pays out benefits to designated beneficiaries. Here is a timeline for the process:
Speak with a financial advisor for federal employees to determine if a private insurance policy or the life insurance benefits provide by FEGLI best suit your retirement goals. Schedule a free consultation here.
When it comes to retirement planning, few details are as deceptively simple, and potentially devastating, as your beneficiary designations. For federal employees, keeping your beneficiary information current isn’t just good housekeeping. It’s a legal safeguard that can determine whether your loved ones receive your retirement savings, or face a costly, emotional mess.
TSP pays death benefits strictly according to the beneficiary designation on file at the time of death. That means:
This order may not reflect your wishes, and it can lead to legal disputes, delays, or unintended outcomes. Imagine this: a federal employee divorces and remarries but forgets to update their TSP beneficiary. Years later, they pass away and their ex-spouse receives the entire account. The new spouse, children, or intended heirs? Legally left out. And TSP cannot honor verbal instructions, wills, or court orders that contradict the form on file.
Updating your beneficiaries is simple, but must be done correctly:
You can designate up to 20 beneficiaries, including individuals, trusts, charities, or your estate. This is a key planning checkpoint. Employees are encouraged to review beneficiary forms annually. A five-minute update can prevent years of regret. Your thrift account might be one of your largest financial assets. Don’t let outdated paperwork decide its fate. Keeping your beneficiary designations current is one of the simplest, most powerful ways to protect your legacy.
Read this article about TSP Inheritance Rules
Divorce is never just emotional, it’s logistical. For federal employees, it’s also bureaucratic. When a marriage ends, your benefits don’t automatically update to reflect your new reality. And if you don’t take action, your ex-spouse could receive survivor benefits you never intended, or your current partner could be left with nothing.
The Federal Employees Retirement System (FERS) provides survivor benefits to spouses if elected, but divorce changes the game.
Key Action: Review your retirement paperwork and submit a new election after divorce or remarriage. Survivor benefits are not automatic and must be actively managed.
Unlike FERS, Social Security is governed by federal law and cannot be divided in a divorce decree. But your ex-spouse may still qualify for survivor benefits if:
Important Note: You don’t need to take action for your ex to receive these benefits. They apply automatically if eligibility is met. There is also spousal survivor supplement benefit if the widow or widower of a federal employee is under the age of 60.
The FEGLI program pays out based on the beneficiary form on file, not your will or divorce decree.
Key Action: Submit a new SF-2823 form after divorce. This is the only way to change your FEGLI beneficiary.
Your Thrift Savings Plan account is considered marital property and can be divided during divorce via a Retirement Benefits Court Order (RBCO).
Key Action: Update your TSP-3 beneficiary form and consult legal counsel if a RBCO is issued.
If you have additional federal benefit questions, contact our team of CERTIFIED FINANCIAL PLANNER™ (CFP®), Chartered Federal Employee Benefits Consultants (ChFEBC℠), and Accredited Investment Fiduciary (AIF) professionals. At PlanWell, we are federal employee financial advisors with a focus on retirement planning. Learn more about our process designed for the career fed.
Preparing for federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars here! Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting here.
Skip to content
