Your FEGLI Coverage Might Still Be Active—But That Doesn’t Mean It Still Makes Sense

Key Takeaways

• If you’re still enrolled in FEGLI during retirement, it’s worth reviewing whether you’re paying more than the benefit is worth as you age.

• The rising cost of FEGLI coverage after age 60 can outpace your needs, especially if your financial obligations have decreased.

You’re Still Covered—but at What Cost?

Many government employees enter retirement with Federal Employees’ Group Life Insurance (FEGLI) still intact. On the surface, that sounds like a great safety net. But once you reach retirement age, particularly after 60, it’s time to look closely at what that continued coverage is costing you—and whether it still makes sense in your retirement strategy.

FEGLI was built with active employees in mind, not long-term retirees. While it can continue into retirement, its cost structure and coverage design often stop aligning with your needs as you get older. You might be holding onto coverage that no longer fits your situation—or worse, you could be paying significantly more than it’s worth.

Understanding FEGLI’s Structure in Retirement

FEGLI consists of four components:

• Basic Insurance

• Option A (Standard Optional Insurance)

• Option B (Additional Insurance)

• Option C (Family Insurance)

When you retire, your Basic coverage can continue at no cost if you choose the 75% reduction. But any optional coverage—especially Option B—can become dramatically more expensive with age.

Here’s how FEGLI changes after retirement:

• At age 60, premiums for optional coverage start rising every five years.

• By age 70 and beyond, Option B premiums can become prohibitively expensive.

• Basic coverage with full reduction becomes free after age 65 if you retire with it in place.

This is why many retirees start reconsidering their FEGLI elections around age 60 to 65.

When FEGLI Premiums Start to Spike

You may have paid modest premiums while working. But that affordability fades quickly after age 60, especially for Options B and C. Here’s what you should keep in mind:

• Option B and C premiums increase every 5 years starting at age 60.

• The jumps at ages 65, 70, 75, and beyond are substantial.

• By age 80, Option B premiums can be several times higher than they were at age 60.

So while your income may drop in retirement, your FEGLI premium does the opposite. That growing gap can quietly erode your retirement income unless addressed in advance.

Are You Still Protecting Someone Who No Longer Needs It?

Many government workers originally enrolled in FEGLI to protect dependents, cover mortgage debt, or replace income in case of early death. But by the time you hit your 60s or 70s, your financial picture has probably changed:

• Your mortgage may be paid off.

• Your children might be financially independent.

• You could have sufficient savings in your TSP or pension.

If no one depends on your income anymore, paying rising premiums for high coverage amounts may not be justifiable.

What Happens If You Keep Basic Coverage Only?

You have three options for Basic coverage in retirement:

• 75% Reduction: Your coverage reduces gradually starting at age 65 (or retirement, if later), until it reaches 25% of the original value. Premiums stop at that point.

• 50% Reduction: Your coverage reduces to 50%, and you pay a small premium throughout retirement.

• No Reduction: Your full coverage amount continues, but premiums continue for life and rise slightly over time.

Most retirees choose the 75% reduction because it becomes free and still provides a modest benefit. But if you kept the no-reduction option, you should reevaluate whether that cost aligns with your current goals.

The Option B Dilemma

This is where most retirees struggle. Option B offers up to five times your annual salary in additional coverage. While that can be valuable during your working years, the retirement math changes quickly.

• Option B premiums are based on your age band and coverage amount.

• Once you’re over 60, the cost can climb sharply every 5 years.

• After 70, it may become one of your most expensive retirement expenses.

Ask yourself: Are you still insuring a risk that exists—or paying for peace of mind that’s no longer necessary?

Option C Is Worth Reviewing Too

Option C insures your spouse and eligible dependent children. Like Option B, its cost rises with age. If your children are now grown or your spouse has their own life insurance or assets, continuing Option C coverage may not serve any real purpose.

And if you’ve kept it simply because “it’s always been there,” it’s time to reconsider it as part of your broader retirement strategy.

Alternative Strategies If You Drop FEGLI

If you determine that FEGLI no longer fits, you still have options. But timing is critical:

• Private life insurance can be more cost-effective if purchased early (ideally before age 60).

• Guaranteed issue policies are available for older retirees but often come with limited death benefits and high costs.

• Annuities or savings vehicles might make more sense than paying ongoing premiums for coverage you don’t need.

Just make sure you’re not giving up FEGLI without having a clear plan for what (if anything) will replace it.

Timeline of Key FEGLI Milestones

• At retirement: Decide whether to carry FEGLI into retirement and choose your reduction options.

• Age 60: Optional coverage costs begin to rise significantly.

• Age 65: Basic coverage becomes free with the 75% reduction. Premiums stop.

• Ages 70, 75, 80: Optional coverage costs spike again every 5 years.

• Anytime post-retirement: You can cancel or reduce coverage, but once dropped, optional coverage cannot be reinstated.

Understanding these milestones helps you make intentional decisions rather than defaulting into unnecessary expenses.

Emotional vs. Financial Thinking

Life insurance decisions often involve more than just numbers. You may have emotional reasons for keeping coverage:

• Fear of being a burden

• Desire to leave something behind

• Habit or legacy mindset

But if your financial obligations have shifted and your retirement income needs more protection, it’s time to evaluate from a numbers-first perspective.

Consider working with a financial expert who understands both the federal benefits system and how to project long-term retirement needs.

What You Can Do Right Now

If you’re still carrying FEGLI into retirement and haven’t reviewed your elections since leaving government service, take these steps:

1. Review your most recent FEGLI coverage and premium breakdown.

2. Evaluate your current financial dependents and liabilities.

3. Decide whether Basic coverage with a 75% reduction is enough.

4. Check if you’re paying for Option B or C and ask if it still serves a purpose.

5. Compare alternatives if you decide to drop some or all FEGLI options.

Staying enrolled without questioning the value of each piece of coverage can cost you thousands over the course of your retirement.

Don’t Wait Until It’s Too Late to Adjust

The worst time to make life insurance decisions is when your health has declined or when the costs have become unsustainable. Being proactive in your early 60s—or even late 50s—puts you in control.

You don’t have to drop everything, but you owe it to your future self to run the numbers, reassess your needs, and keep only what still delivers value.

Reframe Your Coverage for the Retirement You’re Living Now

FEGLI served you well during your career, but retirement is a different stage—with different risks and different priorities. What once felt like essential protection may now be an unnecessary drag on your income.

Make 2025 the year you fully assess what your life insurance is doing for you and whether it still aligns with the future you’re building.

Speak with a licensed professional listed on this website to get a clear, unbiased look at your coverage and what it means for your long-term financial health.