Here’s What Retirees Should Do With Their FEGLI Before Their Next Birthday Hits

Key Takeaways

• FEGLI costs increase significantly every five years, especially after age 60, so reviewing your coverage before your next birthday can prevent future financial strain.

• Understanding how your life insurance needs change in retirement helps you decide what to keep, reduce, or cancel to avoid unnecessary premiums.

Why Your Birthday Matters for FEGLI

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The Federal Employees’ Group Life Insurance (FEGLI) program doesn’t operate like a flat-rate insurance policy. Instead, your premiums increase on a schedule—typically every five years—as you move into older age brackets. That means your birthday isn’t just a personal milestone. It’s also a financial one.

FEGLI cost jumps can be steep. For Basic coverage, the government pays part of your premium while you’re working, but after retirement, you pay the full share unless you qualify for certain reductions. Optional coverages—Option A, B, and C—are fully paid by you and get more expensive quickly, especially after age 60.

So if your next birthday is coming up in 6 months or less, now is the right time to look at your FEGLI setup.

How FEGLI Premiums Change Over Time

FEGLI premiums are age-based and increase at five-year intervals. Here’s the general pattern you can expect:

• Age 50-54: Modest increase

• Age 55-59: Noticeable jump

• Age 60-64: Steep increase

• Age 65-69: Even steeper

• Age 70 and above: Substantial costs, especially for Option B and Option C

If you do nothing, the cost will automatically rise with age. That’s why it’s crucial to act before your next birthday. Once you cross into a new age band, you’re locked into the higher premium unless you reduce or cancel your coverage.

Questions to Ask Before Your Next Birthday

1. Do You Still Need the Same Level of Coverage?

When you were working and raising a family, life insurance helped replace your income. But in retirement, the equation changes. Ask yourself:

• Do you still have financial dependents?

• Are your children self-sufficient?

• Do you have debt that would burden others?

• Will your pension or TSP cover your spouse’s financial needs?

If the answer to most of these is no, you might not need the same level of coverage. Reducing or dropping some options before your birthday can help lower your future costs.

2. Are You Eligible for the 75% Reduction Option?

At retirement, you can choose how your Basic coverage will behave after age 65:

• 75% Reduction: Your coverage reduces to 25% of its original value after age 65 (or retirement if later) with no premium beyond age 65.

• 50% Reduction or No Reduction: You keep more coverage, but you continue paying premiums.

If you’re approaching age 65 or retirement, selecting the 75% Reduction before your next birthday can help you eliminate future premiums. But this election must be made when you retire or within 60 days after.

3. Are You Still Carrying Option B or Option C?

Option B (additional coverage in multiples of salary) and Option C (coverage for family members) can become prohibitively expensive with age. Many retirees choose to reduce or drop these options as they approach significant birthdays. Consider:

• Does anyone still rely on this benefit?

• Do you have other life insurance or savings?

• Can your survivors manage without this payout?

Dropping or reducing these options before your premium increases can lead to significant long-term savings.

The Cost of Doing Nothing

If you keep all your FEGLI coverage unchanged after retirement, you could end up paying far more than you need to. For example:

• Premiums for Option B can climb dramatically after age 60.

• By age 70, costs can become unsustainable for retirees on fixed income.

Many retirees don’t realize how much they’re paying until the higher premiums start to bite. A pre-birthday review helps you avoid this surprise.

Timeline to Review and Adjust

Here’s a smart timeline to help you manage your FEGLI coverage in 2025:

• 6-12 months before your birthday: Pull your most recent FEGLI statement and examine current costs.

• 3-6 months before: Evaluate if your needs have changed. Talk with your spouse or financial advisor.

• 1-3 months before: Submit any changes via your retirement system (e.g., OPM for annuitants).

Don’t wait until the last minute. Some changes take time to process, and you don’t want to miss your opportunity to reduce costs before your new age bracket kicks in.

Understanding Your FEGLI Options

You can carry FEGLI into retirement if:

• You were covered for the five years immediately before retirement, or from first eligibility.

• You retire on an immediate annuity.

Here’s what that means for each part of FEGLI:

• Basic Insurance: Government shares cost while working. In retirement, you choose the reduction level (75%, 50%, or none).

• Option A (Standard): Flat $10,000 benefit. Premiums stop at age 65 if you elect reduction.

• Option B (Multiple of Salary): Becomes very expensive after age 60. Can reduce or cancel.

• Option C (Family): Also gets costly. Coverage ends unless reduction is chosen.

Each option has its own reduction rules and cost implications, so review all of them.

Should You Replace FEGLI With Other Coverage?

Some retirees consider private life insurance to replace FEGLI if the costs become too high. However, you must qualify medically, and private plans typically become more expensive with age. In many cases, reducing FEGLI is a better financial move than replacing it.

Also, FEGLI doesn’t require medical underwriting, which is a major advantage if you have health issues. Replacing it could mean losing this benefit.

Don’t Forget Survivor Benefits and Final Expenses

Even if your debts are gone and kids are grown, some coverage may still be useful. Think about:

• Burial and funeral costs

• Unpaid medical bills

• Income for a surviving spouse

A small amount of life insurance can cover these without requiring expensive premiums. This is another reason to evaluate reductions, not total cancellations.

What Happens If You Do Nothing?

If you don’t make any changes:

• Premiums automatically rise with age

• You keep paying, even if the need is no longer there

• Your retirement income may shrink without warning

It’s not just about the money. It’s about aligning your coverage with your actual needs and financial priorities. That’s why pre-birthday planning is essential.

The Bottom Line on Reviewing FEGLI Before Your Birthday

Taking action before your next birthday helps you:

• Avoid stepping into a higher premium tier

• Adjust or cancel unnecessary coverage

• Align your life insurance with your retirement goals

You don’t want to make last-minute decisions after the cost has already gone up. By planning now, you’re protecting your retirement income and ensuring your coverage is doing exactly what it should.

If you’re unsure what changes to make, get in touch with a licensed agent listed on this website for personalized, professional guidance.