What Happens to the Remaining $24,000 FEGLI Coverage When an Employee Dies

FEGLI Death Benefit Payment

When a federal employee dies, the remaining $24,000 in FEGLI coverage is paid as a lump-sum death benefit directly to the designated beneficiary. This payment is separate from any annuity the employee may have accumulated, and it does not reduce the annuity amount. The Office of Personnel Management (OPM) processes the claim and disburses the funds once the required documentation is submitted and verified.

How the $24,000 Lump Sum Is Calculated

The $24,000 figure represents the basic life insurance coverage amount available to most federal employees under FEGLI Option A. When an employee retires and elects to continue this coverage into retirement, the premium is deducted from the annuity payments. Upon the retiree's death, the $24,000 is paid in full to the beneficiary. If the employee died while still active or during a period of unpaid leave, the same lump-sum amount applies, provided the coverage was in force at the time of death.

Beneficiary Designation and Claims Process

The beneficiary must be designated on the Standard Form 2818 (Beneficiary Designation) for the FEGLI coverage to pass outside the estate. If no beneficiary is on file, the death benefit becomes part of the employee's estate and is distributed according to state law or the terms of a will. To file a claim, the beneficiary typically needs to submit the death certificate, proof of the relationship or designation, and a completed claim form to OPM. Processing times vary depending on the completeness of the submission and OPM's current workload.

Interaction with Other Benefits

The FEGLI lump-sum death benefit is not subject to federal income tax, though state tax treatment can vary. It does not affect Social Security survivor benefits or any other retirement annuity the employee may have left behind. The payment is made in addition to any annuity already owed to the retiree's estate or surviving spouse, making it a separate and additive financial resource for the beneficiary.

Key Considerations for Beneficiaries

• The $24,000 is paid as a single lump sum, not as ongoing monthly income.
• Beneficiaries should submit claims promptly to avoid delays in receiving the funds.
• If the employee had additional FEGLI options (B or C), those amounts are paid separately and may have different premium structures.
• The death benefit is generally not taxable at the federal level, but beneficiaries should consult a tax advisor for state-specific guidance.