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FEGLI Policyholders Are Grappling with Rising Premiums—Here’s What You Can Do Right Now

Missy E
November 14, 2025

Key Takeaways

FEGLI premiums increase significantly with age, especially for retirees, making it crucial to review your policy regularly.
Understanding your FEGLI options, including alternatives and adjustments, can help you manage costs while maintaining adequate coverage.

The Reality of Rising FEGLI Premiums

Federal Employees Group Life Insurance (FEGLI) has long been a cornerstone of life insurance for federal employees, but many policyholders face a sobering reality as they age: premiums rise sharply. While the program offers valuable benefits, it’s essential to understand why costs escalate and what you can do to stay in control.

FEGLI premiums are tied to age brackets, and once you hit certain milestones, your costs can skyrocket. This is particularly true after retirement, as FEGLI’s basic and optional coverages adjust their rates in ways that often surprise retirees. Without proactive planning, you might find yourself paying more than expected or even reconsidering whether to keep your coverage.

Why FEGLI Premiums Increase

The FEGLI program’s age-based premium structure is designed to reflect the increased risk of insuring older individuals. As you enter higher age brackets, particularly post-retirement, the cost of maintaining life insurance through FEGLI becomes significantly higher. Here are some factors that contribute:

Age Brackets: Premiums jump at specific age thresholds, typically every five years after age 50.
Optional Coverages: While basic coverage remains relatively stable, optional coverages like Option B and Option C increase substantially with age.
Retirement Impact: Once you retire, you may no longer benefit from government contributions to your premiums, leaving you to shoulder the full cost.

Steps to Take Control of FEGLI Costs

Rising premiums don’t have to catch you off guard. By taking a proactive approach, you can manage costs and ensure your coverage meets your needs. Here are actionable steps to help you stay ahead:

1. Review Your Coverage Annually

Your insurance needs change over time. An annual review of your FEGLI policy helps ensure that you’re not paying for more coverage than necessary. During your review:

Assess how much coverage you genuinely need.
Determine whether optional coverages still align with your goals.
Consider how your financial situation or family dynamics may have shifted.

2. Explore Alternatives to FEGLI

FEGLI may not always be the most cost-effective option, especially as you age. Alternatives like private life insurance policies can sometimes offer better rates and more tailored coverage. Keep in mind:

Private policies often require a health exam, which can impact premiums.
Starting a private policy earlier in your career can lock in lower rates.
Compare the benefits and limitations of private insurance versus FEGLI to find what’s best for your circumstances.

3. Opt for FEGLI’s “Reduction at Retirement” Option

Retirees have the option to reduce their FEGLI Basic coverage over time, which lowers premiums. Consider this option if:

You no longer need the full coverage amount.
You want to preserve some coverage without bearing the full cost.

4. Use Open Season to Adjust Your Plan

FEGLI rarely has open seasons, but when it does, you can make adjustments to your coverage without needing a qualifying life event. Use these opportunities to:

Increase or decrease coverage.
Reevaluate whether optional coverages are necessary.

Balancing FEGLI with Other Benefits

Many federal retirees coordinate FEGLI with other benefits to create a comprehensive financial plan. For example:

Thrift Savings Plan (TSP): Use TSP savings to offset potential financial gaps if you reduce your life insurance coverage.
Federal Employees Health Benefits (FEHB): Prioritize health coverage while balancing life insurance needs.
Social Security: Consider the role Social Security survivor benefits play in your overall strategy.

The Cost of Waiting

If you’re nearing retirement or already retired, the cost of delaying action can be significant. Rising premiums can quickly consume a larger portion of your fixed income. Acting now allows you to:

Avoid unnecessary expenses.
Retain control over your financial planning.
Ensure your loved ones remain protected.

Understanding the Reduction Options

Retirees face specific decisions about FEGLI Basic coverage reduction:

75% Reduction: Premiums end at age 65, but coverage decreases by 2% per month until 25% of the original amount remains.
50% Reduction: Premiums continue at a lower rate, with coverage decreasing to 50%.
No Reduction: Coverage remains at 100%, but premiums are significantly higher.

How Age Impacts Your Premiums

To understand the effect of age brackets:

Premiums for Basic coverage typically stay manageable.
Option B and Option C costs escalate sharply after age 50 and even more dramatically after age 65.

Take a moment to calculate the cost difference between maintaining your current coverage and reducing or eliminating optional coverages. This step can reveal substantial savings.

Strategies for Retirees

1. Lock in Lower Premiums Early

If you’re still employed, consider increasing your coverage now while premiums are lower. This strategy can save money compared to adding coverage later in life.

2. Use Retirement Benefits Strategically

Combine FEGLI with other retirement benefits to maximize financial security. For instance:

Use TSP withdrawals to supplement reduced insurance coverage.
Coordinate with survivor benefits from your pension or Social Security.

3. Plan for Inflation and Future Needs

Life insurance isn’t just about covering immediate expenses. Consider:

Future healthcare costs for your spouse or dependents.
Inflation’s impact on your coverage’s purchasing power.
Long-term financial support for dependents, such as college tuition.

The Importance of Educating Yourself

Understanding FEGLI’s complexities is key to making informed decisions. Take the time to:

Read through official FEGLI documentation.
Consult with a financial advisor specializing in federal benefits.
Attend retirement planning seminars offered by your agency or third-party organizations.

Taking Action Now

The sooner you address rising FEGLI premiums, the better positioned you’ll be to manage costs effectively. Here are some immediate steps you can take:

Schedule a review of your FEGLI policy this month.
Explore alternative insurance options and compare rates.
Consult with a benefits counselor to understand all your choices.

Staying Proactive

FEGLI premiums are an inevitable part of federal employment and retirement, but with the right strategies, you can stay ahead of the curve. By reviewing your policy regularly, exploring alternatives, and making adjustments as needed, you can ensure your coverage aligns with your needs and budget.

Managing FEGLI in 2025 and Beyond

Navigating rising premiums requires a proactive mindset. While it might feel overwhelming at times, breaking the process into manageable steps can make all the difference. Start by educating yourself, seeking advice, and taking advantage of any available resources. Remember, the choices you make today can have a lasting impact on your financial future.