Bedrock Investment Advisors understands your benefits and can help you with your goals.

3 Signs That You Might Be Overpaying for Your FEGLI Coverage and What You Can Do About It

Missy E
November 14, 2025

Key Takeaways:

If you’re still paying for FEGLI coverage into retirement, your costs may have increased significantly compared to when you first enrolled. Evaluating whether you need the same level of coverage now can help reduce expenses.
There are alternatives to FEGLI that may be more cost-effective, particularly as you age. Exploring your options can help you maintain coverage without overpaying.

Is Your FEGLI Coverage Costing You More Than It Should?

‘ Group Life Insurance (FEGLI) program offers life insurance coverage to federal employees and retirees, but many people don’t realize how costly it can become over time. If you’re holding onto your FEGLI policy without reassessing its value, you might be paying more than necessary. Here’s how to tell if you’re overpaying—and what you can do about it.

1. Your Premiums Have Increased Dramatically Over Time

When you first enroll in FEGLI, the premiums might seem reasonable, especially as an active employee. However, those costs increase significantly once you retire. If you kept FEGLI into retirement, you might have noticed that:

Premiums for Option B coverage skyrocket as you age, often doubling or tripling in later years.
FEGLI coverage remains tied to your salary, which may not be as relevant once you retire.
The cost of coverage can quickly outweigh the benefits, especially if your financial situation has changed.

Over the course of a 30-year career, what once seemed like an affordable expense can turn into a major financial burden. Many retirees are shocked to see their premiums surge after leaving federal service, making it crucial to monitor these costs before they become unsustainable.

What You Can Do:

Review your most recent FEGLI deductions and compare them to your initial costs.
Consider reducing or eliminating Option B or C, which tend to be the most expensive parts of FEGLI.
Explore alternatives such as term or whole life insurance that might offer better value at your age.
If you’re still working, check how your premiums will change upon retirement so you can plan ahead.

2. Your Life Insurance Needs Have Changed

Many federal employees sign up for FEGLI early in their careers when they have dependents to support or financial obligations like a mortgage. However, your financial situation in retirement might look very different:

Your children may now be financially independent.
Your mortgage and major debts may be paid off.
You may have built up significant retirement savings that reduce the need for large life insurance coverage.
Your spouse or other dependents may already have sufficient financial resources.

The life insurance policy that made sense when you had young children and a mortgage may no longer serve the same purpose now that you’re in retirement. Paying high premiums for unnecessary coverage could be draining your retirement funds.

What You Can Do:

Reassess your life insurance needs. If your financial situation has changed, you might not need as much coverage as before.
Calculate the actual amount your beneficiaries would need and compare it to your current FEGLI benefits.
If you still need coverage, compare FEGLI’s costs with private life insurance options to see if switching makes sense.
Determine if a lower coverage level could still meet your needs while saving you money.

3. You’re Paying for Unused Coverage

FEGLI offers different options, including Basic, Option A (Standard), Option B (Additional), and Option C (Family). Many retirees maintain these options without questioning whether they still need them. If you’re paying for more coverage than necessary, you could be wasting money.

What You Can Do:

Check your latest FEGLI statement to see which options you’re still paying for.
Determine whether you still need Option B (which covers multiples of your salary) or Option C (which covers family members).
If you decide to keep some coverage, consider reducing the number of multiples under Option B to lower your premiums.
Review your situation every few years to ensure you aren’t holding onto unnecessary policies.

Making Smarter Decisions About Your Life Insurance

If you determine that your FEGLI costs are too high, here are some steps you can take:

Compare Private Life Insurance Policies: While FEGLI is convenient, private insurance might offer better rates as you age, depending on your health.
Drop Unnecessary Options: Reducing your FEGLI coverage can lead to significant savings, especially if you no longer need Options B or C.
Consider Switching Before Retirement: If you’re still employed and looking to reduce costs, transitioning to a private policy before retiring may provide better rates.
Review Your Coverage Every Few Years: Your financial needs change over time, so reevaluating your life insurance periodically can ensure you’re not overpaying.
Speak with a Financial Advisor: Consulting a professional can help you navigate the complexities of life insurance and determine the most cost-effective option.

Why Paying Attention to FEGLI Costs Matters

As a federal employee or retiree, managing your expenses is crucial for a secure retirement. Life insurance is an important safety net, but paying too much for coverage you no longer need can drain your retirement funds. By evaluating your FEGLI costs and making informed decisions, you can ensure you’re only paying for the protection that truly benefits you and your family.

A significant number of retirees find that they are paying thousands of dollars annually for FEGLI, with little return on their investment. Taking the time to assess your coverage now can prevent financial strain in the future.

If you need help evaluating your options, get in touch with a licensed agent listed on this website. They can provide personalized guidance to help you make the best decision for your retirement needs.