Life Insurance Premium Hikes Are Here—What Federal Employees Need to Know About FEGLI Changes

Missy E
November 14, 2025

Key Takeaways

Federal Employees’ Group Life Insurance (FEGLI) premiums have increased in 2025, making it more crucial than ever to review your coverage.
By understanding how these changes impact your retirement planning, you can make informed decisions about your financial future.

FEGLI Premiums: What’s Changing?

FEGLI, the life insurance program for federal employees and retirees, is a cornerstone of federal benefits. However, premiums for this essential coverage have increased significantly in 2025. These hikes affect Basic and Optional coverages differently, with certain age bands seeing more dramatic increases. If you’re approaching retirement or already retired, these adjustments may alter your financial planning.

The 2025 changes are part of a broader trend of rising insurance costs, driven by factors like increased claims and updated actuarial tables. While federal employees benefit from government-subsidized Basic insurance, Optional coverages—which are not subsidized—can become more expensive as you age.

Understanding Basic vs. Optional FEGLI Coverage

FEGLI offers two primary types of coverage:

1. Basic Coverage

Cost Structure: Premiums are determined by your salary and partially subsidized by the government.
Coverage Amount: Equal to your annual salary, rounded to the next $1,000, plus an additional $2,000.
Changes in 2025: Although Basic premiums remain relatively stable, older employees and retirees may notice incremental increases.

2. Optional Coverage

Options A, B, and C: These provide additional coverage for yourself and your family.
- Option A: Adds $10,000 to your coverage.
- Option B: Multiples of your salary, up to 5 times.
- Option C: Coverage for your spouse and eligible dependents.
Cost Structure: Optional premiums increase with age, making them progressively more expensive.
Changes in 2025: Significant rate hikes are observed, particularly for employees and retirees in higher age brackets.

Why Premiums Increase with Age

Life insurance premiums generally rise as you age because the risk to insurers increases. FEGLI is no exception. Here’s a closer look at how age impacts your premiums:

Under 35: Relatively low rates, making FEGLI a cost-effective option.
Ages 50-65: Premiums rise sharply, especially for Optional coverages.
65 and Beyond: Costs can become prohibitive, prompting many retirees to reconsider their coverage.

If you’re in an older age band, now is the time to assess whether FEGLI still meets your needs or if alternative options might be more cost-effective.

How Premium Hikes Impact Retirement Planning

Rising FEGLI premiums can disrupt even the most meticulous retirement plans. For retirees, the challenge lies in balancing life insurance costs with fixed incomes. Here are some considerations:

1. Budget Adjustments

Evaluate how the increased premiums fit into your retirement budget.
Consider whether Basic coverage is sufficient or if Optional coverages are still necessary.

2. Impact on Survivor Benefits

Life insurance often complements survivor benefits. Ensure your coverage aligns with the needs of your beneficiaries.
Review how much your spouse or dependents might need for financial stability.

3. TSP Withdrawals

Rising premiums may force you to dip into Thrift Savings Plan (TSP) funds sooner than planned, potentially impacting your long-term financial security.

Strategies to Manage FEGLI Costs

If rising premiums are straining your budget, there are steps you can take to manage these costs without compromising your coverage:

1. Reevaluate Your Needs

Ask yourself:

Do I still need Optional coverage?
Is my Basic coverage sufficient for my family’s needs?

2. Consider Reducing Coverage

Dropping or reducing Optional coverage can significantly lower your premiums.
For retirees, Basic coverage can be retained at a reduced cost after age 65.

3. Explore Alternative Options

Compare FEGLI to private life insurance policies. While you’re prohibited from discussing specific private plans here, know that individual policies may offer competitive rates for healthy applicants.
Investigate whether converting FEGLI coverage to a private policy—a feature available to some employees—is a viable option.

4. Maximize TSP Savings

Use TSP catch-up contributions if you’re over 50 to build a financial cushion.
Allocating funds for future life insurance costs can provide peace of mind.

Tools to Help You Plan

Take advantage of the resources available to federal employees and retirees to navigate FEGLI changes effectively:

FEGLI Calculator: Available on the Office of Personnel Management (OPM) website, this tool helps you estimate your premiums and coverage amounts.
Retirement Counselors: Speak with your agency’s human resources department or a financial advisor familiar with federal benefits.
Open Season Reviews: While Open Season isn’t applicable to FEGLI every year, periodic reviews ensure you’re making informed choices.

What Happens After Age 65?

Retiring employees often face critical decisions about their FEGLI coverage:

Basic Coverage Conversion: Basic insurance continues into retirement, with no premiums required after age 65 if you opt for reduced coverage.
Optional Coverage: Premiums for Optional coverage rise steeply and may no longer be affordable. Many retirees choose to drop these coverages entirely.
Open Enrollment Periods: Unlike FEHB, FEGLI doesn’t have annual Open Seasons, so changes to your coverage can only be made during specific life events.

Special Considerations for Federal Retirees

As a retiree, your options differ from those of active employees. Here’s what you need to keep in mind:

1. FEGLI Portability

Basic coverage can’t be converted into a private policy, but Optional coverage can in some cases.
Conversion may lead to higher premiums but provides continuity.

2. Cost vs. Benefit Analysis

Calculate how much your dependents stand to receive versus how much you’re paying in premiums.
Consider alternative financial instruments like annuities or trusts if FEGLI no longer serves your needs.

3. Medicare Integration

Many retirees coordinate their health benefits through Medicare. Ensure your life insurance choices align with your healthcare and financial goals.

Making the Most of Your Federal Benefits

Your federal benefits package is designed to provide financial security, but it’s essential to adapt it to your evolving needs. Regularly reviewing your FEGLI coverage can help you:

Ensure your life insurance aligns with your retirement goals.
Avoid overpaying for coverage you no longer need.
Provide for your family’s financial stability in the years to come.

Planning Ahead for Future Changes

Life insurance isn’t static. It evolves with your career, family, and financial situation. To stay ahead of future premium hikes and coverage adjustments:

Monitor updates from OPM regarding FEGLI changes.
Schedule annual reviews of your benefits package.
Prepare for possible premium increases by setting aside funds now.

Ensuring Financial Security Through Retirement

Rising FEGLI premiums in 2025 highlight the importance of proactive retirement planning. By understanding your coverage options, reevaluating your needs, and leveraging available tools, you can make informed decisions that safeguard your financial future and provide peace of mind for your loved ones.