Federal Employees’ Group Life Insurance provides valuable coverage for federal employees and retirees, but it follows rules that are very different from private life insurance. Many FEGLI claims are denied or redirected not because coverage lapsed, but because the beneficiary designation was missing, outdated, or invalid under federal law.
These disputes often surprise families because federal rules override state court orders, divorce decrees, community property laws, and powers of attorney. Understanding how FEGLI handles beneficiary designations is critical if a claim has been denied or paid to the wrong person.
Why FEGLI Beneficiary Rules Are So Strict
FEGLI is governed by federal statute, not state insurance law. The government pays benefits strictly according to the most recent valid federal designation form on file. Intent does not matter. Court orders do not matter. Wills do not matter.
If the designation form is valid and properly filed, the government will pay the listed beneficiary even if the result appears unfair or contradicts a state court judgment.
This rigidity is the single most common reason FEGLI disputes arise.
Conflicts Between State Court Orders and FEGLI
State courts frequently order federal employees to maintain life insurance for a former spouse or children as part of a divorce settlement. While those orders may be enforceable against private policies, they do not control FEGLI benefits.
Under federal law, FEGLI must be paid to the beneficiary named on the federal form, regardless of any state court directive.
Example: A retired federal employee was ordered in divorce proceedings to keep his former spouse as the beneficiary. Years later, he filed a new FEGLI designation naming his new wife. When he died, the benefits were paid to the new wife. The former spouse challenged the payment based on the divorce decree, but the court ruled that the federal designation controlled and the decree could not override it.
The only potential remedy in these situations is a separate lawsuit against the recipient, not against the FEGLI program itself.
Invalid Beneficiary Changes Made Using Power of Attorney
One of the most common mistakes families make is assuming a power of attorney allows someone to change a FEGLI beneficiary. It does not.
FEGLI requires that the insured personally sign the beneficiary designation. No agent, family member, or power of attorney holder can do it for them, even if the insured is incapacitated.
Example: A daughter held financial power of attorney for her father while he was in memory care. She submitted a FEGLI form naming herself as beneficiary. After his death, the claim was rejected because the father had not personally signed the form. The prior beneficiary remained entitled to the proceeds.
These situations frequently involve allegations of undue influence or manipulation and often require legal review to determine whether any valid designation exists at all.
Community Property Claims Do Not Override FEGLI
Surviving spouses in community property states often assume they are entitled to at least half of a life insurance policy purchased during the marriage. That assumption does not apply to FEGLI.
Federal law ignores community property rules and pays benefits solely based on the designation form.
Example: A federal employee in Texas named his sister as FEGLI beneficiary before marriage and never updated the form. After his death, his widow claimed a community property interest. The entire benefit was paid to the sister because the designation was valid and federal law controlled.
This result feels harsh, but it is legally correct under FEGLIA.
What Happens If No Beneficiary Was Named
If there is no valid FEGLI beneficiary designation on file, the government follows a mandatory order of precedence. This order cannot be changed by a will, handwritten note, or family agreement.
The order generally prioritizes:
• Surviving spouse
• Children
• Parents
• Executor of the estate
• Next of kin under state law
Example: A federal employee never completed a beneficiary form and lived with a long term partner. When he died, the partner expected to receive the benefits. Instead, the money was paid to the employee’s surviving parent under the federal order of precedence. The partner’s challenge failed because FEGLI rules were followed correctly.
Why These Denials and Redirected Payments Can Be Challenged
While FEGLI rules are strict, disputes still arise when:
• A designation form was never properly filed
• The signature is disputed
• Multiple forms exist with conflicting dates
• The insured lacked capacity at the time of signing
• The government relied on an invalid or incomplete form
In those cases, a denial or payment decision may be challenged through administrative review or litigation.
Final Thoughts
FEGLI beneficiary disputes are not ordinary life insurance disagreements. They are governed by rigid federal rules that often override family expectations, divorce orders, and state property laws.
If a FEGLI claim was denied, paid to the wrong person, or rejected due to an alleged beneficiary issue, the outcome depends entirely on whether a valid federal designation exists and whether it was properly executed.
Because these cases turn on technical compliance rather than fairness or intent, careful legal review is often the only way to determine whether the decision can be overturned or whether recovery must be pursued from the recipient instead of the insurer.