Are you one of the roughly four million people in the United States who is employed by the federal government? If so, chances are you’re covered under FEGLI—the Federal Employees' Group Life Insurance program. While this group plan is a convenient benefit, it comes with rules and limitations that can catch families off guard, especially after the death of a loved one. If life insurance is a key part of your estate planning, it’s essential to understand how FEGLI policies actually work.
What makes FEGLI different from private life insurance?
Unlike private life insurance policies governed by state law, FEGLI is controlled by federal regulations. This means that state protections commonly afforded to surviving spouses may not apply. Many states have laws that automatically revoke a former spouse’s status as a beneficiary after divorce, defaulting the payout to a current spouse. But federal law preempts these state laws for FEGLI policies. That means if you forget to update your FEGLI beneficiary designation after a divorce or remarriage, your former spouse could still receive the full life insurance payout—even if you intended otherwise.
Why you must keep your FEGLI beneficiary form up to date
It’s not uncommon for employees to fill out beneficiary paperwork during their first week on the job and never look at it again. Years may pass, marriages may begin or end, and families may grow—but unless you specifically change your beneficiary designation through the proper FEGLI process, the original designation remains legally binding. Federal courts consistently uphold FEGLI’s "filed designation" rule, meaning the listed beneficiary at the time of the insured’s death is the one who gets paid, regardless of the policyholder’s more recent intentions.
How this plays out: two real-world scenarios
Let’s compare two nearly identical cases with drastically different outcomes, due entirely to the type of life insurance policy involved.
Private Life Insurance (State Law Applies)
John had a private life insurance policy through a large accounting firm. When he got divorced and later remarried, he never updated his beneficiary form. However, his home state had an automatic revocation statute that invalidated the designation of his ex-wife after their divorce. When John died, both spouses submitted claims. The insurer paid his current wife under state law, in line with what John would likely have wanted.
FEGLI Coverage (Federal Law Applies)
Now consider Paul, who also got divorced and remarried but had FEGLI coverage through his job with the VA hospital. Like John, Paul failed to update his beneficiary form. When he passed away, the Office of Federal Employees’ Group Life Insurance paid his ex-wife because she was still listed on the original form. Federal law trumped state automatic revocation rules, and Paul’s current spouse received nothing.
What about divorce decrees or court orders?
Some people assume a divorce decree or family court order stating who should receive life insurance proceeds will protect their current spouse or children. Unfortunately, that assumption is incorrect when it comes to FEGLI. Courts have repeatedly held that unless a properly filed FEGLI beneficiary designation form matches what the court ordered, the insurer must pay whoever is named on the form—no exceptions.
What can go wrong? A closer look at one case
In one case, a federal employee named Marcus had named his first wife as the beneficiary of his FEGLI policy shortly after they married. Years later, they divorced, and Marcus remarried but never updated his beneficiary form. His second wife, whom he had been married to for over a decade, was shocked to learn after his death that she wouldn’t receive a penny of the $250,000 payout. The insurance company followed federal rules and paid the ex-wife.
Even when the surviving spouse presents clear evidence that the policyholder would have wanted the benefits to go elsewhere, FEGLI’s rules are unyielding. The beneficiary form is the only document that matters.
How to fix or avoid this problem
Update your FEGLI beneficiary designation any time your family status changes (e.g., divorce, remarriage, birth of children)
Submit changes using the proper government forms (Standard Form 2823)
Retain a copy of your updated form and request confirmation of receipt from your HR department or the Office of Personnel Management
Legal help for denied or disputed FEGLI claims
Disputes over FEGLI benefits can be legally and emotionally draining, especially when the deceased policyholder’s wishes are not being honored. If you’ve received a FEGLI claim denial or are involved in a dispute over who is entitled to receive the benefits, contacting an attorney experienced in life insurance litigation is critical.
Our firm specializes in contesting FEGLI denials and resolving beneficiary conflicts. We offer free consultations and only collect a fee if we secure a recovery on your behalf. If you believe your loved one’s benefits were wrongly paid or withheld, call us today. We’re here to help.