The Federal Employees' Group Life Insurance (FEGLI) program provides life insurance coverage to federal employees at group rates. During your working years, FEGLI can be a cost-effective way to maintain life insurance. But the premium structure changes dramatically in retirement — particularly after age 65 — and many federal retirees find themselves paying far more than necessary for coverage they may not need. This guide helps you understand what you have and how to evaluate it.
FEGLI Coverage Types Explained
FEGLI consists of Basic coverage and three optional coverages:
Basic
Equals your annual salary rounded up to the next $1,000, plus $2,000. The government pays one-third of the Basic premium; you pay two-thirds. Basic coverage is automatic unless you waive it.
Option A — Standard
A flat $10,000 of additional coverage. Relatively inexpensive during your working years.
Option B — Additional
Coverage equal to 1, 2, 3, 4, or 5 times your annual salary. This is the most expensive optional coverage, and premiums increase significantly with age.
Option C — Family
Coverage for your spouse ($5,000 per multiple) and eligible dependent children ($2,500 per multiple). Available in 1–5 multiples.
What Happens to FEGLI Premiums After Retirement
At retirement, you elect how your FEGLI coverage will be handled going forward. For Basic coverage, you choose one of three reduction options:
No Reduction
Your Basic coverage remains at its full amount for life. You continue paying premiums, which increase significantly after age 65.
50% Reduction
Your Basic coverage reduces by 1% per month starting at age 65 until it reaches 50% of its pre-retirement value. Premiums stop at age 65.
75% Reduction
Your Basic coverage reduces by 2% per month starting at age 65 until it reaches 25% of its pre-retirement value. No premiums after age 65.
Comparing FEGLI to Private Insurance
The key question is whether you still need life insurance in retirement, and if so, whether FEGLI is the most cost-effective way to maintain it.
Many federal retirees find that by retirement, their need for life insurance has diminished — the mortgage is paid, children are grown, and the FERS survivor benefit provides income protection for a spouse. In that case, reducing or eliminating FEGLI coverage may make sense.
If you do need coverage, private permanent life insurance (whole life or universal life) purchased earlier in your career may provide better value than maintaining high FEGLI Option B multiples into your 70s and 80s. The comparison depends on your age, health, and coverage needs.
Key Takeaways
- FEGLI consists of Basic coverage plus optional coverages (Option A, B, and C)
- At retirement, you elect a reduction schedule for Basic coverage — this decision is permanent
- Option B premiums increase significantly with age and can become very expensive after 65
- Many retirees find their need for life insurance has diminished by retirement
- The FERS survivor benefit provides income protection for a spouse — separate from life insurance
- Compare FEGLI costs to private insurance before assuming FEGLI is the best option
Important Federal Rules to Know
- FEGLI reduction elections at retirement are generally irrevocable — choose carefully
- You cannot increase FEGLI coverage after retirement (with limited exceptions)
- FEGLI premiums are deducted from your annuity in retirement
- Option B coverage can be reduced in multiples at retirement
- FEGLI does not require a medical exam to maintain coverage you already have
Questions to Consider
- Do I still need life insurance in retirement, and if so, how much?
- What FEGLI options am I currently enrolled in, and what are the projected premiums at age 65, 70, and 75?
- Does the FERS survivor benefit adequately protect my spouse's income without additional life insurance?
- Have I compared the long-term cost of maintaining FEGLI Option B to private insurance alternatives?
- What Basic coverage reduction election makes sense given my financial situation and coverage needs?
Educational Disclaimer: This guide is provided for general educational purposes only and does not constitute personalized financial, legal, or insurance advice. Federal Retirement Pros is not affiliated with, endorsed by, or a representative of the U.S. Office of Personnel Management (OPM), the Office of Federal Employees' Group Life Insurance (OFEGLI), or any government agency. FEGLI premium rates are subject to change. Always verify current rates and coverage details with OPM.
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Have Questions About Your Situation?
Federal retirement decisions are personal. If you'd like to discuss how these rules may apply to your individual situation, schedule a Federal Retirement Review.
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