FEGLI vs. WAEPA: Choosing the Right Life Insurance for Federal Employees

As a federal employee, life insurance options can sometimes feel overwhelming. Two primary choices are the Federal Employees’ Group Life Insurance (FEGLI) and the Worldwide Assurance for Employees of Public Agencies (WAEPA). While both offer life insurance coverage tailored to government workers, their differences in pricing, coverage, and flexibility can significantly impact your decision. Let’s break down these options to help you make an informed choice.

FEGLI: The Standard Choice for Federal Employees

FEGLI is the life insurance plan offered by the federal government, available to nearly all federal employees. Established in 1954, it provides term life insurance with automatic coverage for eligible employees, making it a convenient choice.

FEGLI’s enrollment is easy, requiring no medical exam, with employees automatically covered under the Basic plan unless they opt out. The Basic plan covers your annual salary rounded up to the next thousand, plus $2,000. For additional coverage, employees can opt for more insurance (Options A, B, and C) to increase their total protection based on salary and dependents.

However, FEGLI has its downsides. The most significant drawback is that premiums rise dramatically with age. By the time you reach your 50s or 60s, the cost can become prohibitively expensive, making it less cost-effective. Additionally, since FEGLI is term life insurance, it doesn’t accumulate cash value, meaning there’s no option to borrow against the policy or use it as a retirement asset.

WAEPA: Flexibility and Competitive Pricing

WAEPA, a nonprofit organization, was established to provide life insurance specifically for federal employees and their families. Unlike FEGLI, WAEPA offers more flexibility in coverage amounts and often competitive premiums that don’t rise as sharply with age.

WAEPA’s policies can offer coverage up to $1.5 million, making it attractive for those seeking higher protection than FEGLI. Additionally, WAEPA’s policies are fully portable, meaning you can maintain your coverage even if you leave federal service—a feature FEGLI lacks. Another advantage is the inclusion of living benefits, allowing you to access part of your death benefit if you become terminally ill, offering extra security during a medical crisis.

The trade-off is that medical underwriting is required to access WAEPA’s lower rates, meaning individuals with preexisting conditions might face higher premiums or even denial of coverage. Also, since WAEPA isn’t automatically offered like FEGLI, you’ll need to proactively enroll and manage payments directly with the organization.

Which Option Is Right for You?

Choosing between FEGLI and WAEPA depends on factors like your age, health, and financial goals. If you’re young and healthy, WAEPA’s lower premiums and higher coverage options may make it the better choice. On the other hand, if you’re older or have health issues, FEGLI’s automatic enrollment without medical underwriting might be more accessible.

One important factor to weigh is the cost of FEGLI over time. Its premiums tend to increase sharply with age, so consider whether switching to a more flexible and portable policy like WAEPA might better serve your long-term needs.

Portability and Switching Between FEGLI and WAEPA

A key difference between the two plans is portability. FEGLI’s portability is limited: Basic and Option A insurance cannot be carried into retirement, and for FEGLI coverage to continue into retirement, you must have been enrolled for at least 5 years immediately prior to retiring or during your entire period of service.

On the other hand, WAEPA’s coverage is fully portable, meaning you can maintain your policy regardless of your length of service or retirement status. This flexibility could make WAEPA a better choice for those planning on leaving federal service or wanting to ensure lifelong coverage.

Switching from FEGLI to WAEPA requires some steps. After confirming your eligibility as a federal employee or retiree, you’ll need to apply for WAEPA coverage, undergo medical underwriting, and potentially complete a medical exam. Once approved, you can cancel your FEGLI coverage through your HR department. Make sure the effective dates line up to avoid any gaps in coverage.

It’s harder to switch back to FEGLI, as you generally can only enroll during open seasons (which are rare) or after a qualifying life event. Returning to FEGLI after leaving can also involve waiting periods and proof of insurability.

Important Considerations

When weighing your options, consider the following:

• Medical Underwriting: FEGLI’s automatic enrollment is easier, but WAEPA’s underwriting might offer better rates for younger, healthier individuals.
• Coverage Amounts: WAEPA offers higher coverage limits than FEGLI.
• Costs: Compare premiums carefully—use WAEPA’s rate calculator and see how it stacks up against FEGLI.
• Family Coverage: Explore differences in spouse and dependent coverage between FEGLI and WAEPA.
• Retirement: Consider how switching affects your long-term insurance needs and retirement planning.

Final Thoughts

Both FEGLI and WAEPA offer valuable life insurance options for federal employees, but the right choice depends on your individual needs. WAEPA’s flexibility and lower premiums are appealing, but FEGLI’s automatic coverage and ease of enrollment offer convenience, especially for those with health concerns.

It’s also worth remembering that you’re not limited to these two options. Other federal programs, like SAMBA and USAA or private insurance carriers, could offer more tailored solutions. Make sure to shop around and compare based on your needs—and be mindful that many online articles are sponsored content, which may not always present the full picture.

Finally, don’t forget that life insurance isn’t for everyone. Evaluate whether you truly need it, and if you do, ensure your decision aligns with your broader financial goals.