FEGLI Premium Hikes Have Retirees Asking Tough Questions About Coverage

Missy E
November 14, 2025

Key Takeaways

Understanding your FEGLI premiums and coverage options is essential for making informed decisions as you approach retirement.
Rising premiums can significantly impact your retirement budget, prompting the need for alternative strategies or coverage adjustments.

Why FEGLI is a Hot Topic Among Retirees

As a federal employee, you’ve likely relied on the Federal Employees’ Group Life Insurance (FEGLI) program to provide peace of mind. It’s a dependable benefit, offering financial security

for your loved ones in the event of your passing. However, as you approach retirement, those premiums may start to raise eyebrows—and for good reason.

With significant premium hikes tied to age brackets, retirees are finding themselves questioning whether FEGLI still fits their needs. Let’s break down the key concerns and strategies to help you evaluate your options.

Breaking Down FEGLI Coverage

FEGLI provides a range of coverage options, giving you the flexibility to tailor your plan based on your financial goals and family needs. Here’s a quick overview:

Basic Insurance: Equal to your annual salary rounded up to the next $1,000, plus an additional $2,000.
Option A (Standard): Fixed coverage of $10,000.
Option B (Additional): Coverage equal to one to five times your annual salary.
Option C (Family): Coverage for your spouse and dependent children in multiples of $5,000 and $2,500, respectively.

While this flexibility is appealing, the costs rise steeply with age, especially for Options B and C.

The Real Cost of Aging with FEGLI

One of the biggest shocks comes from how FEGLI premiums escalate as you grow older. Premiums are based on 5-year age bands, and the increases can be dramatic. If you’re nearing your 60s or 70s, expect a sharp uptick in costs that could take a significant bite out of your retirement income.

Why the Increases?

FEGLI’s age-based pricing reflects the higher risk of insuring older participants. The government subsidizes Basic Insurance premiums for active employees, but as a retiree, you’ll shoulder the full cost. For Options B and C, the increase can be substantial—potentially doubling or tripling over time.

Are You Over-Insured?

Here’s a question worth asking: Do you still need as much coverage as you did earlier in your career? During your working years, the need for higher life insurance coverage often aligns with mortgages, raising children, or other financial responsibilities.

But in retirement, those needs may change. If your mortgage is paid off and your children are financially independent, maintaining a large life insurance policy might not be as necessary.

Evaluate Your Current Situation

Dependents: Are your spouse or other dependents relying on your income?
Savings: Do you have sufficient retirement savings to cover final expenses and support loved ones?
Debt: Have you eliminated major debts, or do significant obligations remain?

A clear understanding of your financial picture can guide your decision on whether to reduce, maintain, or cancel certain FEGLI options.

Alternative Coverage Options to Consider

While FEGLI is convenient, it’s not the only game in town. Many retirees explore alternatives that better suit their evolving needs and budgets.

Private Life Insurance

Private life insurance policies can offer level premiums, meaning they don’t increase as you age. If you’re in good health, shopping for a new policy could provide comparable coverage at a lower cost. However, be mindful of any medical underwriting requirements.

Self-Insurance

Another strategy is self-insuring, which involves relying on your savings and investments instead of maintaining a life insurance policy. If your assets are sufficient to cover final expenses and provide for your loved ones, you may no longer need external coverage.

Adjusting Your FEGLI Plan

If you decide to stick with FEGLI but need to manage costs, adjusting your coverage is an option.

Dropping Optional Coverage

You can cancel Options B and C at any time to reduce your premiums. The Basic Insurance component is often the most cost-effective choice for retirees, as it includes a 75% reduction in coverage at no cost starting at age 65.

Electing the 75% Reduction

For Basic Insurance, you have the option to choose a 75%, 50%, or no reduction in coverage starting at age 65. While the 75% reduction costs nothing, the other options require higher premiums but maintain more coverage. Carefully consider your needs before making this election.

The Timing of Your Decisions Matters

Timing is critical when adjusting your life insurance. Canceling FEGLI options too soon could leave you underinsured, while holding onto high-cost coverage too long can erode your retirement savings.

Key Milestones to Watch

Pre-Retirement: Review your FEGLI options and costs at least a year before retirement.
At Age 65: Reevaluate your Basic Insurance reduction election.
After Retirement: Monitor your premiums and consider alternative options if costs become unsustainable.

FAQs About FEGLI for Retirees

Can I Re-Enroll in FEGLI After Canceling?

No, once you cancel your FEGLI coverage, you cannot re-enroll. This decision is permanent, so weigh your options carefully.

What Happens to My Coverage If I Do Nothing?

If you make no changes, your coverage will continue into retirement, but expect significant premium increases over time, especially for optional coverage.

Is It Possible to Keep FEGLI Without Paying Premiums?

Yes, but only if you choose the 75% reduction for Basic Insurance at age 65. This reduction is automatic unless you elect otherwise.

Preparing for the Financial Impact of Premium Hikes

The rising cost of FEGLI premiums doesn’t have to derail your retirement plans. By assessing your current needs, exploring alternatives, and timing your decisions wisely, you can find a path that aligns with your financial goals.

Take the time to crunch the numbers and evaluate what truly makes sense for your situation. This proactive approach will empower you to make decisions that support your long-term financial health.

Plan Your Coverage for Peace of Mind

Navigating FEGLI’s complexities can feel daunting, but taking charge of your coverage decisions is worth the effort. Whether you stick with FEGLI, reduce your coverage, or explore other options, the key is ensuring that your plan aligns with your retirement goals.