Is FEGLI Option A Worth It? Costs, Benefits, and Retirement Impact Explained

When it comes to the Federal Employees’ Group Life Insurance (FEGLI) program, most people are familiar with Basic coverage but fewer give much thought to Option A. On paper, Option A is simple: a fixed $10,000 of extra life insurance coverage.

 In reality, whether it’s worth paying for depends on a combination of costs, benefits, and how it behaves in retirement.

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What is FEGLI Option A?

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Option A is an optional form of coverage you can add on top of your FEGLI Basic insurance. Here’s what you get:

• $10,000 coverage: This is a flat amount, the same for every employee, regardless of salary or years of service.
  
  
• Accidental Death & Dismemberment (AD&D): While you’re an active federal employee, Option A includes an extra $10,000 payout if you die in an accident, or a partial payout if you suffer certain serious injuries. This AD&D coverage ends the day you retire.
  
  
• Enrollment is not automatic: You must complete SF-2817 (Life Insurance Election form) within 31 days of becoming eligible to opt in.
  
  

How Much Does Option A Cost?

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Premiums for Option A are age-based and increase every five years as you move into a new age bracket. The cost applies per $1,000 of coverage, but since Option A is always $10,000, it’s easy to calculate your monthly payment.

Here’s an approximate cost breakdown:

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Why the cost change matters:

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If you join the federal workforce young, the early years are inexpensive just a few dollars a year. But as you move into your 50s and 60s, the annual cost can reach over $150 for the same $10,000 coverage.

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What Happens in Retirement?

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One of the most important things to know about Option A is how it changes once you leave federal service.

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Eligibility to carry into retirement:
To keep Option A when you retire, you must have been enrolled in it for the five years immediately before your retirement (or for your entire federal career if shorter).

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Once you retire and keep it:

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• You stop paying premiums, Option A becomes free in retirement.
  
  
• The $10,000 coverage gradually reduces by 2% each month starting at age 65 (or at retirement if later).
  
  
• This reduction continues until the benefit reaches $2,500, where it stays for the rest of your life.
  
  
• AD&D coverage is no longer included.
  
  

Example:

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If you retire at 62 and keep Option A:

• At retirement: $10,000 benefit
  
  
• At age 66: ~$9,040 benefit
  
  

By age 70: ~$2,500 benefit (locked in)

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You should read - fegli life insurance rates

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Who Should Consider Option A?

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Because Option A is small and fixed, it works best for certain needs:

It may be right for you if:

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• You want a low-cost supplement to your Basic coverage.
  
  
• You’re looking for a small policy to help cover funeral or final expenses.
  
  
• You don’t want to shop around for private life insurance but want some extra cushion.
  
  
• You like the idea of free coverage in retirement, even if reduced.
  
  

It may not be right for you if:

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• You need a significant income replacement for your family in case of your death.
  
  
• You’re comfortable getting private life insurance at competitive rates.
  
  

You’re focused on maximizing coverage per dollar spent.

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Pros & Cons of Option A FEGLI

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Cost-Benefit Perspective Today

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When Option A was first introduced, $10,000 was equivalent to more than $85,000 in today’s dollars. That made it a meaningful financial safety net.

Today, with funeral costs averaging $7,000–$10,000, Option A’s modern role is more about covering final expenses or providing a small lump sum to loved ones. For many retirees, the appeal is in having some benefit for free, no matter how small without needing medical exams or policy shopping.

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How Option A Compares with Other FEGLI Options

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• Option B: Lets you choose 1–5 times your salary in coverage. Scales with income but can get very expensive as you age.
  
  
• Option C: Covers eligible family members, not you.
  
  

If your goal is substantial personal coverage, Option B might be more suitable but keep in mind the steep premium increases later in your career.

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Make the Most of Your Federal Benefits

Don’t leave your life insurance decisions to chance. Whether you’re deciding if Option A is worth it or exploring other FEGLI choices, the right strategy can save you money now and secure peace of mind later.

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Book your free federal retirement and benefits review today get expert guidance tailored to your coverage needs and retirement goals.

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Conclusion

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FEGLI Option A is simple, predictable, and easy to keep, especially if you have already had it for years. 

• If you want small supplemental coverage and appreciate the idea of free lifetime benefit in retirement, Option A could be worth keeping.
  
  
• If you’re aiming for serious family protection or want better value per premium dollar, explore other options.
  
  

In short: Option A won’t change your family’s financial future, but it can take care of life’s final expenses without costing you much especially later in life.

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FAQs

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1. What is Option A on FEGLI?

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Option A is an add-on to your FEGLI Basic coverage, offering a fixed $10,000 in life insurance plus accidental death benefits while employed.

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2. What is the difference between Option A and B life insurance?

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Option A offers a fixed $10,000 in coverage for everyone. Option B allows you to choose 1–5 times your annual salary in coverage, so it can be much higher but also more expensive as you age.

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3. What is FEGLI optional deduction?

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This refers to the payroll deduction taken for any FEGLI optional coverage you elect (Options A, B, or C). Premiums vary by option and age.

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4. What is FEGLI Option B?

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Option B is a flexible coverage option under FEGLI where you can select between 1 and 5 times your annual salary in coverage. Premiums are age-based and increase in five-year increments.

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