FEGLI After Retirement: Coverage, Costs, And Options

Added to basic, known as “A,” “B,” and “C.” To carry your insurance coverage(s) into retirement you must have been enrolled in FEGLI for the five years before your retirement, or from your earliest opportunity to enroll. If you don’t meet that requirement, you cannot continue coverage.

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The decision to continue or drop FEGLI after retirement affects both your financial plan and your family's future security. But should you keep it?

Here’s the bottom line: FEGLI can be worth continuing if your health prevents you from securing a private policy or if you value the simplicity and guaranteed coverage. However, it’s also known for its increasing premiums and reduced value over time, making it less appealing for many healthy retirees.

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Let’s break down the components, costs, and choices to help you decide.

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What is FEGLI?

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FEGLI is a life insurance program for federal employees that includes:

• Basic Insurance (Option A)
  
  
• Optional Insurance – Option B and Option C
  
  

FEGLI (federal employee group life insurance)doesn't require a medical exam, and premiums are deducted from your paycheck while you’re employed. Upon retirement, these premiums can either continue or shift depending on the coverage choices you make.

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Eligibility to Continue FEGLI After Retirement

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To carry your FEGLI coverage into retirement, you must have been enrolled in FEGLI for the five years leading up to your retirement, or since your first opportunity to enroll. If you don’t meet this rule, unfortunately, you cannot keep any portion of the FEGLI coverage post-retirement.

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FEGLI Options After Retirement

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1. Basic Coverage (Option A)

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This is automatically provided unless you opted out and is equal to your salary rounded up to the nearest $1,000, plus $2,000.

Upon retirement, you have three choices:

• 75% Reduction: Coverage reduces to 25% over time after age 65 and becomes free (no premiums).
  
  
• 50% Reduction: You pay a small premium to keep 50% of the coverage.
  
  
• No Reduction: You keep the full amount, but continue paying increasing premiums.
  
  

Most retirees choose the 75% reduction to avoid continued costs.

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2. Option B (Multiple of Salary)

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You can elect up to 5 times your salary in coverage.

Important: Premiums for Option B rise significantly every five years, and the cost after 65 can become steep. Upon retirement, you can choose to:

• Keep full coverage and pay high premiums.
  
  
• Reduce or cancel it entirely.
  
  

For many retirees, this becomes too expensive and is often dropped unless there's a specific need.

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3. Option C (Family Coverage)

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Covers spouses and eligible dependent children. Like Option B, costs rise with age and many retirees opt to cancel or reduce it.

Final Thoughts

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FEGLI is convenient, but not always cost-effective in retirement especially with Optional coverages. Weigh your health, needs, and available alternatives. A quick review with a financial advisor or benefits counselor can help you make the right call.

Remember: Once you retire, there are limited chances to change your FEGLI decisions so plan wisely.

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FAQs

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1. Should You Keep FEGLI After Retirement?

Here’s a simplified guide to help you decide:

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2. Can I continue FEGLI into retirement automatically?

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No. You must have been enrolled in FEGLI for the five years immediately before retirement or since your first opportunity to enroll. If you don’t meet this requirement, you cannot continue any part of FEGLI.

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3. What happens to my Basic FEGLI coverage after I retire?

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You’ll choose one of these:

• 75% reduction: Coverage gradually reduces to 25% of its original value; premiums stop at age 65.
  
  
• 50% reduction: You pay a small ongoing premium and retain 50% of the original value.
  
  
• No reduction: You pay full premiums to maintain 100% coverage.
  
  

4. Are the premiums for Option B and Option C fixed after retirement?

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No. FEGLI Option B and C premiums increase every five years (at ages 65, 70, 75, etc.). The older you get, the more you pay.

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5. Can I drop Option B or C coverage after retirement?

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Yes. You can reduce or cancel Option B and C coverage at any time after retirement. However, once dropped, you generally cannot reinstate them.

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