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5 Questions You Should Ask Yourself Before Deciding Whether to Keep FEGLI After Retirement

Missy E
November 14, 2025

Key Takeaways

Federal Employees’ Group Life Insurance (FEGLI) can provide valuable coverage in retirement, but costs increase significantly over time.
Evaluating your financial situation, healthcare needs, and alternative life insurance options is crucial before deciding whether to keep or drop FEGLI.

Understanding FEGLI: What Happens When You Retire?

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If you’ve spent your career as a federal employee, you likely have coverage under the Federal Employees’ Group Life Insurance (FEGLI) program. But once you retire, keeping FEGLI isn’t as straightforward as it may seem. While it continues to provide coverage, the costs change, and the benefits might not be as necessary as they once were. Before making a decision, you should ask yourself these five critical questions to determine if maintaining FEGLI into retirement is the right choice for you.

FEGLI offers coverage that follows you into retirement, but at what cost? Many retirees assume they should keep their existing life insurance without evaluating their true financial and insurance needs. The reality is that FEGLI premiums rise steeply, and your coverage may not be as essential as it was during your working years. Reviewing your life insurance options now can save you thousands of dollars and help you make the best financial decision for your retirement years.

1. Can You Afford FEGLI Premium Increases in Retirement?

One of the biggest concerns retirees face with FEGLI is the cost. While basic coverage remains relatively affordable during your working years, FEGLI premiums rise significantly once you retire, especially if you opt to keep additional coverage beyond the basic plan.

Basic Coverage: You have the option to maintain it at no cost, but only if you accept a 75% reduction in coverage starting at age 65.
Option B (Additional Coverage): Premiums increase every five years and become much more expensive as you age.
Option C (Family Coverage): Costs also rise over time, impacting your long-term affordability.

If you plan to live on a fixed retirement income, these premium hikes can become burdensome. Over time, the money you put into FEGLI might be better used elsewhere—such as in a savings account, annuity, or another insurance policy with fixed premiums. Review your projected retirement expenses and determine whether the increasing FEGLI costs will create financial strain.

2. Do You Still Need Life Insurance in Retirement?

Life insurance serves different purposes throughout your career and retirement. During your working years, it provides financial security for your family in case something happens to you. But in retirement, your need for life insurance may change.

Ask yourself:

Do you still have dependents who rely on your income?
Have you already paid off your mortgage and major debts?
Do you have enough savings and retirement income to support your spouse or other beneficiaries without life insurance?
Are you looking for coverage to handle final expenses, estate taxes, or outstanding medical bills?

If your financial obligations have decreased and your retirement savings are sufficient, you may not need as much coverage as you did before. In that case, reducing or dropping FEGLI could make sense. However, if you still have financial responsibilities or wish to leave a financial cushion for your family, keeping some form of coverage may be beneficial.

Some retirees choose to downsize their life insurance rather than eliminating it altogether. This can mean reducing FEGLI coverage to a level that balances affordability with peace of mind.

3. Are There More Cost-Effective Alternatives to FEGLI?

FEGLI isn’t the only life insurance option available to federal retirees. In some cases, private life insurance policies can offer better rates, stable premiums, and customizable coverage. Unlike FEGLI, many private policies allow you to lock in a fixed premium for the life of the policy.

When comparing alternatives, consider:

Term Life Insurance: If you only need coverage for a specific number of years, term policies may offer lower costs than FEGLI.
Whole Life Insurance: If you want lifelong coverage with a fixed premium and potential cash value accumulation, whole life might be a better choice.
Final Expense Insurance: Designed to cover funeral costs and medical bills, this may be an affordable alternative if you don’t need a large policy.

Shopping around for private life insurance can lead to significant savings. Many federal retirees find that a combination of lower-cost policies and their existing savings provides better financial security than continuing with FEGLI.

4. How Does FEGLI Fit Into Your Overall Retirement Plan?

Retirement planning isn’t just about pensions and savings—it’s also about ensuring that your loved ones are financially protected. FEGLI can be part of that plan, but it’s important to assess how it fits into your broader financial picture.

Consider these factors:

Survivor Benefits: If your spouse will receive a survivor annuity, do they also need life insurance benefits?
Thrift Savings Plan (TSP): If you’ve built a solid TSP balance, do you have enough financial security to eliminate or reduce your FEGLI coverage?
Social Security and Other Income Sources: If your retirement income covers your expenses, is extra life insurance necessary?

Beyond just numbers, your personal peace of mind matters. Will reducing or eliminating FEGLI make you feel financially vulnerable? Or does it free up money for more pressing retirement expenses?

5. Are You Aware of FEGLI’s Reduction Options and How They Impact Your Coverage?

When you retire, FEGLI offers different reduction options, allowing you to control how much coverage you keep and at what cost.

75% Reduction: Your coverage decreases by 2% per month after age 65 until it reaches 25% of the original amount. This option comes with no post-retirement premium.
50% Reduction: Your coverage is cut in half, but you continue to pay a premium.
No Reduction: You keep your full coverage, but premiums increase significantly over time.

Understanding how these reductions affect your policy can help you decide which option, if any, makes sense for you. The right choice depends on your personal financial situation and whether you still need substantial coverage beyond age 65.

What’s the Best Decision for You?

There’s no one-size-fits-all answer when it comes to keeping or dropping FEGLI after retirement. Your decision should be based on your unique financial situation, family needs, and long-term retirement goals.

If you still need coverage and can afford the rising costs, keeping FEGLI might make sense.
If your financial obligations have decreased and other retirement assets provide security, reducing or dropping FEGLI could be the better choice.
If alternative policies offer better rates and flexibility, switching may provide better value.

Before making your final decision, review your options carefully, compare costs, and consider speaking with a financial advisor to ensure you make the best choice for your retirement.

Need Help Deciding? Speak with a Licensed Agent

If you’re still unsure whether to keep FEGLI after retirement, talking to an expert can help. A licensed agent listed on this website can walk you through your options, compare alternative policies, and help you make a decision that fits your financial goals.