FEGLI Premiums Spike With Age—Here’s When to Rethink Your Coverage

Missy E
November 14, 2025

Key Takeaways

FEGLI premiums increase significantly as you age, especially after retirement, making it essential to evaluate whether your current coverage still aligns with your financial goals.
Understanding when and how to adjust or reduce your coverage can help you preserve your annuity and redirect funds toward other essential retirement expenses.

Why FEGLI Was a Good Fit During Your Working Years

The Federal Employees’ Group Life Insurance (FEGLI) program offers government employees a straightforward way to obtain life insurance. When you were working full-time, FEGLI was often an affordable and convenient benefit. Your premiums were automatically deducted, and many employees opted for additional optional coverages, like Option B (multiples of salary) and Option C (family coverage), without much hesitation.

In the early years, the premiums were relatively low, and the simplicity of enrollment through your agency made participation seamless. You didn’t need a medical exam, and the group structure provided broad coverage at competitive rates.

But FEGLI’s affordability begins to change after retirement—and that’s when it’s time to reassess.

The Steep Climb: How FEGLI Premiums Rise With Age

FEGLI coverage becomes increasingly expensive as you move into your 50s, 60s, and beyond. The most significant jumps occur in the optional coverages, especially Option B, which is based on multiples of your salary.

Premiums are age-banded and increase every five years.
The jumps become particularly steep after age 60.
By the time you reach age 75 or older, monthly premiums for optional coverage can consume a noticeable portion of your annuity.

In 2025, the reality is stark: continuing full optional coverage past age 65 or 70 without reviewing your needs could result in paying more in premiums than your loved ones would realistically require.

What Happens to FEGLI After You Retire

When you retire, you’re given choices on how your FEGLI coverage continues. Each option has different implications for coverage and cost:

Basic Insurance

You can continue basic coverage into retirement if you were enrolled for the five years before retirement.
You have three reduction options:
- 75% Reduction: Coverage reduces gradually to 25% of its pre-retirement value at no cost.
- 50% Reduction: Coverage reduces to 50% with some cost.
- No Reduction: Coverage stays at full value but costs more.

Option B (Multiples of Salary)

You may continue some or all of your multiples.
Premiums increase every five years and become expensive post-65.
You can reduce or cancel coverage at any time.

Option C (Family Coverage)

Also age-based and increases in cost post-retirement.
Many retirees choose to drop or reduce it as dependents age or become financially independent.

The Critical Age Milestones to Watch

Several key ages can serve as signals to re-evaluate your FEGLI elections:

Age 50

Premiums for Option B and C increase.
Start reviewing your long-term financial goals and insurance needs.

Age 60

Significant premium increase occurs.
Many retirees reassess whether the cost justifies the benefit.

Age 65

Medicare eligibility starts, and many retirees have reduced health expenses due to coordination with FEHB.
Your financial obligations may also decline.
FEGLI premiums become a larger share of your fixed income.

Age 70–75

Optional coverage premiums are at their peak.
At this point, many retirees consider dropping coverage or switching to a 75% reduction plan for Basic.

Reasons to Keep Some Coverage

While rising costs are a valid concern, you might still benefit from retaining some life insurance during retirement. Here’s when it can still make sense:

You have a mortgage or other debt that outlives you.
You want to leave a tax-free benefit to heirs or a charitable cause.
Your spouse or dependents rely heavily on your annuity income.
You lack other forms of life insurance.

If your coverage matches a specific financial goal, it may still be worth the rising cost—for a while.

When FEGLI Stops Making Financial Sense

As you age, the cost-benefit ratio often tips the other way. You might reach a point where FEGLI is draining your annuity without providing proportional value. Consider dropping or reducing coverage if:

You’ve paid off major debts.
Your children or other dependents are financially self-sufficient.
You’ve accumulated enough savings and retirement income to meet end-of-life needs.
You have other life insurance that provides similar coverage at a lower lifetime cost.

Remember, you can reduce or cancel your optional FEGLI coverages at any time after retirement.

Alternatives to FEGLI in Retirement

Some retirees explore alternatives to FEGLI, especially for life insurance needs after age 65 or 70. Options include:

Self-insurance: Relying on accumulated savings and investments to fund funeral expenses or estate gifts.
Private policies: Term or permanent life insurance—though you’ll need to qualify based on age and health.
Annuities or trusts: Designed to provide structured payouts to beneficiaries.

These choices involve more upfront planning but may offer better value over time, especially if your health allows you to qualify for favorable underwriting.

What to Do Before Making a Change

You don’t want to drop your FEGLI coverage without careful thought. Here’s how to approach your decision:

Review your current FEGLI coverage: Understand your reductions, options, and monthly cost.
Evaluate your financial goals: What role does life insurance play in your retirement plan?
Project your future costs: Know how much you’ll pay at each age milestone.
Consult with a professional: A licensed agent listed on this website can walk you through scenarios and help you compare your options.

Getting Your Timing Right

Timing your decision can save you thousands of dollars over your retirement. Here are some key timing insights:

Reducing or canceling Option B or C early in retirement can preserve more of your annuity.
Electing the 75% reduction for Basic Life at retirement gives you free coverage for life—but at a lower amount.
Switching to self-insurance after your financial obligations decline gives you more flexibility.

The best time to rethink FEGLI is not when the premiums spike—it’s before that. Make the changes ahead of time so you’re not surprised by deductions that take a bigger and bigger bite.

Life Insurance in Retirement Deserves a Second Look

You earned your retirement benefits through years of government service. Don’t let rising insurance costs eat away at your financial stability. Reviewing your FEGLI coverage can be one of the smartest financial decisions you make as a retiree.

If you’re unsure how to proceed, speak with a licensed professional listed on this website to discuss your options. They can help you preserve the coverage you need—and drop the excess that costs you more than it’s worth.