FEGLI Premiums Going Up? Here’s What Federal Employees Should Do to Keep Costs Down

Missy E
November 14, 2025

Key Takeaways:

Understanding Your FEGLI Plan Can Help Lower Costs – Knowing the details of the Federal Employees’ Group Life Insurance (FEGLI) program and the factors driving premium increases is the first step in keeping expenses down.
Strategies for Managing Premium Hikes – Learn how to assess your coverage needs, make plan adjustments, and explore alternative financial options for coverage.

Introduction

Life insurance is a critical part of any financial plan, especially for federal employees who often rely on the Federal Employees’ Group Life Insurance (FEGLI) program. However, if you’ve noticed that premiums for your FEGLI plan seem to be creeping up, you’re not alone. Federal employees and retirees alike are feeling the pinch, with significant increases in premiums as they age. But don’t worry; there are ways to take control of these rising costs. I’ll walk you through what you can do to minimize your premiums and still maintain the peace of mind that life insurance offers.

Why FEGLI Premiums Are Increasing

FEGLI premiums increase with age. Unlike many private sector policies that offer fixed premiums, FEGLI operates on an age-banded premium structure. Every five years, typically starting at age 35, premiums jump to reflect higher mortality risk. While these periodic increases are manageable early on, they can become a real financial burden later in your career or in retirement.

In addition to age, changes in federal policy and the overall cost of providing life insurance have caused periodic increases in premiums across the board. For example, recent premium changes reflect adjustments made by the Office of Personnel Management (OPM) based on their cost analysis for covering claims.

Understanding the Structure of FEGLI Coverage

To make the best decisions for controlling costs, it helps to understand how FEGLI is structured. The program has four components:

Basic Insurance: This is the default coverage for federal employees. The coverage amount is your annual salary rounded up to the nearest thousand, plus an additional $2,000.
Option A: Provides an additional $10,000 in coverage, regardless of your age or salary.
Option B: Allows you to add up to five times your annual salary, giving you significant additional coverage but also exposing you to more premium increases over time.
Option C: Covers eligible family members, providing a set amount for each covered individual.

As you can see, each part of FEGLI serves a different purpose, and understanding your needs can help you decide which coverage options are worth keeping.

Assessing Your Coverage Needs

Evaluating your insurance needs is a crucial step to potentially reducing costs. While FEGLI is valuable, it’s easy to end up paying for more insurance than you actually need. Here are a few questions to consider:

What is your current debt load? If your mortgage is close to being paid off, or if you’re carrying little to no debt, you may not need as much life insurance as you did earlier in life.
Are your dependents financially independent? If your children or dependents are now self-supporting, you may be able to reduce the amount of life insurance you carry.
Do you have significant retirement savings? If your Thrift Savings Plan (TSP) and other retirement funds are well-funded, your family may not need as much life insurance to support them after your passing.

Once you’ve answered these questions, consider adjusting or eliminating parts of your FEGLI coverage. Many employees find that dropping Options B or C, particularly after dependents are financially secure, can be a major cost saver.

Reducing or Adjusting Your FEGLI Coverage

After assessing your coverage needs, it’s time to look at reducing or adjusting coverage to align with those needs. Here are some steps that can make a noticeable difference in your premiums:

1. Drop Unnecessary Options

If you determine that your basic coverage is enough, you might consider dropping Option B or Option C. Remember, the costs for Options B and C increase significantly as you age, and they can be especially pricey if you keep all five multiples of Option B coverage. Reducing or eliminating these options can have an immediate impact on your FEGLI bill.

2. Scale Back Option B

Option B provides a flexible, salary-based additional coverage option. By scaling back from the maximum five multiples to just one or two, you can significantly reduce your costs while still maintaining supplemental coverage.

3. Rethink Coverage for Family Members

Option C covers family members, but it also comes with premiums that increase over time. Many employees find that as their children become financially independent, they no longer need Option C coverage. By eliminating or reducing Option C, you can free up funds without losing vital coverage.

Consider Non-FEGLI Life Insurance Options

FEGLI has its benefits, but it may not be the best option for everyone as premiums rise. Depending on your age, health, and personal situation, you may be able to find a private policy that offers lower premiums or a level premium for a fixed period. Here are some steps to consider:

1. Shop Around for Private Insurance

Private life insurance providers offer term and whole life policies with various options. A term life policy, for example, provides coverage for a fixed period (e.g., 10 or 20 years) with a fixed premium. This option can be cost-effective for those who only need coverage until retirement or until dependents are fully independent.

2. Compare Total Costs Over Time

When evaluating alternatives to FEGLI, consider not only the immediate premium but also how much you’ll pay over the long term. In some cases, a level-premium private policy may result in substantial savings over the course of 10 or 20 years.

Timing Your Coverage Adjustments

For many employees, deciding when to adjust their FEGLI coverage can be tricky. Here’s a general timeline to consider:

In Your 30s and 40s: Premiums are still relatively low, so this may be the time to keep more coverage if your financial obligations are high. However, start thinking about how much coverage you’ll need in the long term.
In Your 50s: Premiums for Options B and C start to rise significantly. Assess your needs and consider reducing or eliminating coverage. Dropping unnecessary multiples of Option B can bring substantial savings as you approach retirement age.
In Your 60s and Beyond: For many federal employees, retirement is in sight, and premiums for FEGLI coverage options become especially steep. Dropping Options B and C at this stage can help you avoid spending a big portion of your retirement income on insurance.

Alternative Financial Planning Options for Coverage

In addition to life insurance, there are other financial strategies you can employ to protect your family’s financial future:

Thrift Savings Plan (TSP) Contributions: Your TSP is a valuable retirement savings tool, and maximizing your contributions can help ensure that your family is financially secure.
Roth and Traditional IRAs: These retirement accounts offer a way to save additional funds for retirement, helping reduce the need for as much life insurance coverage.
Emergency Savings: Building an emergency fund ensures your family has quick access to cash for unforeseen expenses, reducing dependency on life insurance.

Revisit Your FEGLI Plan Regularly

Life changes, and so should your insurance coverage. Revisit your FEGLI plan every five years to ensure it aligns with your needs. Major life events—such as marriage, divorce, the birth of a child, or retirement—may prompt a reevaluation of your life insurance requirements.

Taking Control of Your FEGLI Costs

Navigating FEGLI premiums can feel daunting, but with careful planning and an understanding of your options, it’s possible to reduce your premiums while keeping the essential protection you need. Remember that adjusting coverage, exploring alternatives, and periodically reassessing your plan can all contribute to more manageable costs over time. By taking these proactive steps, you can make the most of your FEGLI coverage without overpaying.