Established by Congress in the Federal Employees’ Group Life Insurance Act of 1954 as a benefit to federal employees and their families and administered by OPM, FEGLI offers federal employees the opportunity to choose from a range of group term life insurance coverage options. FEGLI insurance is provided through a contract OPM has established with MetLife. MetLife’s Office of Federal Employees’ Group Life Insurance (OFEGLI) adjudicates claims under the FEGLI program and makes payments to FEGLI beneficiaries. Most federal employees, including part-time employees, are eligible for insurance under FEGLI, and approximately 85 percent purchase FEGLI coverage. Upon starting their federal employment, federal employees are automatically enrolled in FEGLI’s Basic life insurance coverage unless they file appropriate paperwork with their employing agency to opt out of the program. Basic life insurance coverage equals a federal employee’s annual salary rounded up to the next even thousand plus two thousand dollars, or $10,000, whichever is higher. Basic insurance also provides an extra benefit to employees under age 45, at no additional cost. This extra benefit doubles the amount of Basic insurance payable if the employee dies at age 35 or younger. The extra benefit decreases 10 percent each year until there is no extra benefit at age 45 and above. For Basic coverage, employees pay two-thirds of the premium determined by OPM, and the employing agencies pay the remaining third. The rate all covered employees, regardless of age, pay for each $1,000 of Basic insurance is $0.150 bi-weekly or $0.325 monthly. FEGLI also provides accidental death and dismemberment (AD&D) insurance as part of its Basic insurance at no additional cost. AD&D insurance protects employees in the event of a fatal accident or an accident which results in the loss of a limb or eyesight. For benefits to be paid, the death or loss must occur no later than 1 year from the date of the accident and must be a result of bodily injury sustained from that accident. Federal employees may also choose to purchase three types of Optional insurance in addition to Basic coverage—Options A, B, and C—by submitting a Life Insurance Election Form (SF 2817) within 60 days of beginning their employment to their human resources office.  Option A offers $10,000 of life insurance coverage. Premiums for Option A coverage vary by age groups, as determined by OPM. These groups start with employees “under age 35,” progress in 5-year increments until age 59, and finish with a “60 and over” group. Bi- weekly and monthly costs for Option A coverage range from $0.30 and $0.65, respectively, for the “under age 35” group to $6.00 and $13.00, respectively, for the “60 and over” age group.  Option B offers additional Optional insurance coverage in an amount of one to five multiples of the employee’s annual salary, after rounding the salary up to the next even thousand. For Option B coverage, age group designations also apply but begin with “under age 35,” continue in 5-year age increments until age 79, and end with an “80 and over” age group. Bi-weekly and monthly costs for each $1,000 in insurance can range from a low of $0.03 and $0.065, respectively, for employees under 35 to a high of $2.40 and $5.20, respectively, for employees 80 and older.  Option C covers eligible family members of an employee or retiree, including the enrollee’s spouse and eligible dependent children. The employee selects one to five times an amount (a “multiple”)—$5,000 for a spouse and $2,500 for each eligible dependent child. If employees purchase optional coverage within the 60 days, no medical underwriting is necessary. For Option C coverage, the age group designations are the same as for Option B, and costs range from bi- weekly and monthly amounts of $0.27 and $0.59, respectively, per multiple for those under 35 to $6.00 and $13.00, respectively, per multiple for those 80 and older. When federal employees retire, FEGLI also offers Basic and Optional life insurance, and employees are able to choose among several retirement coverage levels after age 65. For Basic insurance in retirement, employees must choose whether to reduce their postretirement insurance level by 75 percent, 50 percent, or maintain full coverage. Those choosing the 75 percent reduction pay no premiums after reaching age 65. Those choosing the 50 percent reduction or full coverage option continue to pay premiums in amounts determined by OPM; the postretirement premium rates are greater than preretirement rates. When the 75 percent reduction in coverage is selected, OPM reduces the coverage level by 2 percent per month beginning at age 65, until 25 percent of the original coverage remains. If the 50 percent reduction is selected, the coverage level reduces by 1 percent per month beginning at age 65, until 50 percent of the original coverage remains. If no reduction is selected, the coverage does not reduce. Federal employees may also choose to continue Optional coverage into retirement and FEGLI offers several choices. Option A coverage reduces 2 percent per month beginning at age 65, to 25 percent of the preretirement amount, and no premiums are charged in retirement after the retiree reaches age 65. For Options B and C, employees desiring coverage must elect to continue one to five multiples of coverage into retirement, and elect whether to have all of those multiples retain full coverage or reduce by 100 percent, at a rate of 2 percent per month for 50 months, beginning at age 65. For the 100 percent reduction option, once the reduction starts, retirees do not pay premiums after reaching age 65. For the full coverage option, retirees continue to pay the full premium, as determined by OPM for the retiree’s specific age group. The following provides an example of FEGLI premiums for a 48-year old federal employee, married with three children, and earning $88,300 per year.  According to OPM, Basic insurance would cost $13.65 bi-weekly and $354.90 annually. If the employee seeks to maximize Option B coverage by purchasing five times annual pay, Option B coverage would cost $40.05 bi-weekly and $1,041.30 annually. In this example, the employee purchases Basic and Optional life insurance coverage totaling $536,000, at an annual cost of $1,396.20. If this employee continues full Basic and Option B coverage after retirement, by choosing the No Reduction option for both, and retires at the age of 65 (assuming the same $88,300 salary), Basic insurance would cost $1,998.36 annually and Option B coverage would cost $8,330.40 annually. The total amount of Basic and Optional insurance for the employee at the time they retire would be $536,000 at an annual cost to the employee of approximately $10,300. Federal employees may add or adjust FEGLI coverage when life events such as marriage, divorce, death of a spouse, or the acquisition of an eligible child occurs. Federal employees may also add or adjust coverage when OPM offers open seasons, although OPM officials noted that these periods are rare. FEGLI most recently offered open seasons in 1999 and 2004. Employees who opted out of FEGLI coverage upon starting federal employment may also add coverage during these times. Additionally, if at least a year has passed since an employee opted out of FEGLI, an employee may request FEGLI coverage by providing medical information via a form partially completed by the employee’s physician. Employees are responsible for any associated expenses such as a physician’s fee. In addition, certain employees of the Department of Defense are eligible to elect FEGLI coverage without experiencing a qualifying life event or by providing medical information. When a federal enrollee with FEGLI coverage dies, MetLife’s OFEGLI pays claims to the federal enrollee’s designated beneficiary. If no beneficiary has been designated, payments will be made roughly in the following order pursuant to statute: to the enrollee’s surviving spouse; if none, to the child or children in equal shares; if none, to surviving parents in equal shares; if none, to the executor or administrator of the employee’s estate; or, if none, to the enrollee’s next of kin as determined by applicable state laws. The enrollee’s beneficiary or other survivor must follow a prescribed process for filing a claim and receiving payment that begins with contacting the human resources office at the insured’s agency to report the death, submitting a certified death certificate, and submitting a Claim for Death Benefits form. According to FEGLI materials, beneficiaries may choose a payout by receiving a lump- sum check or an RAA. According to the American Council of Life Insurers (ACLI), RAAs have existed since 1982, and many insurers provide them for both group and individual life insurance policies. When an insured person dies, the life insurance company that issued the policy may place the death benefit proceeds into an RAA, which accrues interest for the beneficiaries from the day the account is established for as long as the funds remain in the account. Beneficiaries have full and immediate access to their funds and can withdraw some or all of the funds at any time without penalty. In addition, MetLife pays RAA accountholders a minimum guaranteed interest rate that typically is calculated using one of several market rate indexes. MetLife compounds interest on RAAs daily and credits that interest monthly. MetLife issues a book of drafts to the beneficiary, allowing immediate access to the funds without penalty.