Key Takeaways:

1. FEGLI premiums have changed in 2024—federal employees nearing retirement need to re-evaluate their coverage and costs now before it’s too late.

2. With rising costs and new options for coverage, it’s essential to understand how FEGLI fits into your broader retirement plan and whether private alternatives offer better long-term value.

FEGLI in 2024: Life Insurance Updates Federal Employees Need to Get On Top Of Right Now

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The Federal Employees’ Group Life Insurance (FEGLI) program continues to be a core benefit for federal employees, providing life insurance coverage to millions of workers and retirees. In 2024, there are critical updates that could significantly impact both current employees and those approaching or already in retirement. Staying informed about these changes is crucial if you want to make the right decisions about your life insurance coverage.

FEGLI remains a valuable option for ensuring financial security for your loved ones, but rising costs and the availability of alternative insurance plans mean that federal employees need to re-evaluate their coverage. Getting ahead of these changes now can help you avoid paying for unnecessary coverage or missing out on potential savings.

FEGLI: A Quick Overview

FEGLI is the largest group life insurance program in the world, offering federal employees both Basic and optional life insurance coverage. The Basic coverage is relatively affordable, with the federal government covering a portion of the cost. However, employees bear the full cost of optional coverages—Option A, Option B, and Option C—which can get expensive, especially as you age.

In 2024, many federal employees are seeing increased premiums for their FEGLI coverage, particularly for optional plans like Option B (which provides multiples of your salary in coverage). As life insurance costs rise with age, now is the time to assess whether FEGLI remains the best option for your needs.

Rising Premiums: A Cause for Concern?

FEGLI premiums, especially for older employees, have increased in 2024. Workers aged 60 and above are experiencing some of the sharpest increases in premiums, particularly for optional coverages. Option B, which allows employees to choose up to five times their annual salary in coverage, is seeing the largest hikes, reflecting the higher risk associated with insuring older individuals.

If you’re still working and earning a steady income, these rising premiums may be manageable. However, once you retire and transition to a fixed income, continuing to pay these higher premiums could become burdensome. Many retirees find themselves reducing or dropping their FEGLI coverage as costs outpace their ability to pay.

Basic Coverage: Should You Keep It?

FEGLI’s Basic coverage offers a straightforward life insurance policy that equals your salary rounded up to the nearest thousand dollars, plus an additional $2,000. The federal government subsidizes part of this coverage, making it more affordable compared to the optional plans. In 2024, this Basic coverage remains an attractive option for many federal employees.

Upon retirement, you can continue Basic coverage at no cost after age 65 if you choose to reduce your coverage by 75% over time. This can be a helpful way to keep some life insurance without paying ongoing premiums in retirement. However, if you opt to keep your full Basic coverage, you’ll have to continue paying premiums, which will increase as you age.

For retirees in 2024, keeping Basic coverage may be a smart choice if you’re primarily interested in covering final expenses or leaving a small financial cushion for loved ones. But if your life insurance needs are more substantial, it might be time to consider other options.

Optional Coverage: Is It Still Worth It?

In addition to Basic coverage, FEGLI offers several optional coverages, including:

• Option A: Provides a flat $10,000 in additional coverage.

• Option B: Offers up to five multiples of your annual salary in coverage.

• Option C: Covers your spouse and children, providing family life insurance.

The optional plans have always been more expensive than the Basic plan, but in 2024, the costs are rising sharply, particularly for Option B and Option C. These plans can become prohibitively expensive as employees age, leading many retirees to drop them in favor of private alternatives or reducing coverage to manage costs.

For many, Option B is the first to be reconsidered as they approach retirement. While it provides substantial coverage during your working years, the increasing premiums may outweigh its benefits once you’re no longer earning a federal salary. Similarly, Option C, while offering peace of mind for families, may become too expensive to maintain in retirement.

In 2024, evaluating your continued need for these optional coverages is crucial. You might find that private life insurance plans offer better value or that scaling back on coverage could save you money while still providing the protection your family needs.

FEGLI vs. Private Insurance: Is It Time to Switch?

As FEGLI premiums continue to rise, federal employees are increasingly exploring whether private life insurance might be a better fit. Private life insurance policies can often provide lower premiums, especially for those who are in good health and can pass a medical exam. Unlike FEGLI, where premiums increase sharply with age, many private life insurance policies offer fixed premiums over the life of the policy.

If you’re approaching retirement in 2024, now is the time to compare the costs and benefits of private life insurance versus FEGLI. While FEGLI offers the convenience of guaranteed acceptance with no medical exam, private policies can often be customized to fit your specific needs, providing greater flexibility.

Shopping around for a private policy might reveal significant savings, especially if you’re in good health. However, it’s important to weigh the pros and cons carefully—some private policies may require medical underwriting, and your age and health status can affect your eligibility.

How FEGLI Fits Into Your Retirement Plan

As you move toward retirement, deciding whether to keep your FEGLI coverage should be part of your broader financial planning. Life insurance needs change over time, and what was essential when you were working may no longer be necessary once you’ve retired.

For example, if you’ve paid off your mortgage, saved adequately for retirement, and no longer have dependents relying on your income, you may find that your need for life insurance has diminished. In this case, the rising costs of FEGLI in 2024 might prompt you to scale back your coverage or drop it altogether.

On the other hand, if you still have financial obligations—such as supporting a spouse or covering your children’s education—you may want to maintain some level of life insurance. FEGLI can still provide valuable coverage in these cases, but it’s essential to ensure the premiums remain affordable in retirement.

What You Need to Watch Out for in 2024

In 2024, federal employees should keep a close eye on their FEGLI premiums and be prepared for future changes. As premiums rise, particularly for optional coverage, it’s more important than ever to regularly reassess your needs and costs. The annual Open Season will be a key time for federal workers to evaluate their life insurance options and make adjustments if necessary.

Open Season provides an opportunity to increase, reduce, or cancel your FEGLI coverage without having to undergo a medical exam. However, if you’re considering switching to private life insurance, it’s wise to compare your options outside of Open Season as well. Taking a proactive approach to managing your life insurance will help ensure you’re not paying more than you need to or leaving your family underinsured.

Making FEGLI Work for You in 2024

As life insurance premiums rise and you move closer to retirement, understanding how FEGLI fits into your overall benefits package is critical. Whether you’re a current federal employee or already retired, staying informed about the latest updates will help you make better decisions about your coverage.

In 2024, the best thing you can do is review your life insurance coverage carefully. Consider whether the rising costs of FEGLI are worth it based on your current financial needs, and explore alternatives like private life insurance policies that might provide more flexibility at a lower cost. By being proactive and planning ahead, you can ensure that your life insurance continues to work for you throughout retirement.

Reviewing Your Life Insurance Choices in 2024

As FEGLI continues to evolve, federal employees need to remain vigilant about how life insurance fits into their overall retirement plan. With rising premiums and changing coverage options, it’s more important than ever to evaluate whether FEGLI remains the right choice for you. Stay informed, review your options, and make adjustments to ensure that your life insurance coverage aligns with your financial goals for the future.