Key Takeaways
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FEGLI premiums increase sharply after age 65, often catching retirees by surprise with significant new costs.
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Strategic planning before and during retirement can help you manage or minimize the financial burden of continuing FEGLI coverage.
Understanding How FEGLI Changes After Retirement
The Federal Employees’ Group Life Insurance (FEGLI) program has been a reliable protection tool for millions of government employees. However, what many retirees realize too late is that FEGLI premiums can skyrocket just when you expect your expenses to decline. If you are considering keeping your FEGLI coverage after retiring, it is essential to understand exactly what you are committing to—and at what price.
FEGLI Basic Coverage: What Stays and What Shifts
Your Basic FEGLI coverage continues into retirement if you meet certain criteria:
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You are eligible to continue health benefits into retirement.
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You were insured under Basic FEGLI for the five years immediately before retiring.
Once you reach age 65 or retire, whichever comes later, the Basic insurance is free if you elect the 75% reduction option. Otherwise, premiums continue, and if you choose a lesser reduction (like 50% or no reduction), you will continue paying premiums indefinitely.
75% Reduction Option
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Your Basic coverage gradually reduces by 2% per month after age 65 or retirement, reaching a final level of 25% of the original amount.
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Premiums stop entirely after age 65 or retirement.
No Reduction Option
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Your Basic coverage remains at its full value for life.
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Premiums continue for life and increase significantly with age.
Optional Coverage: A Hefty Price Tag
While Basic coverage becomes manageable after 65 if you select the right option, FEGLI Optional coverage—especially Option B (Additional Coverage)—can become prohibitively expensive.
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Option A (Standard Coverage) reduces to $2,500 at no cost after age 65 or retirement.
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Option B (Additional Coverage) and Option C (Family Coverage) premiums surge dramatically every five years starting at age 50.
In 2025, for retirees aged 65 and older, Option B premiums are at their highest rates. Every five-year age bracket increase brings substantial premium hikes, meaning retirees who maintain high multiples of salary coverage are often shocked by the premium jump at 65, 70, 75, and beyond.
What Drives the Rising Costs After 65?
Several factors drive FEGLI premium increases after retirement:
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Age-Based Pricing: As you age, your risk of mortality increases, and so do your premiums, especially for Optional coverage.
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No Government Contribution: After retirement, the government no longer shares in paying for Optional coverage.
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Higher Multiples: Many retirees elect multiple salary coverage during their careers but fail to scale back in retirement when income changes.
Timeline: FEGLI Costs After Retirement
Here’s a general overview of what you should expect over time:
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At Retirement (typically between ages 55-62): You can elect how you want your FEGLI to continue.
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Age 65:
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Basic coverage becomes free with a 75% reduction.
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Optional coverage becomes much more expensive.
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Age 70:
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Another steep premium jump for Optional coverage.
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Age 75:
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The highest premium band for Optional coverage starts.
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Age 80 and Beyond:
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Premiums remain extremely high, making continued coverage impractical for many.
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Why Many Retirees Drop FEGLI Coverage
By the time retirees reach their late 60s or 70s, they often decide to reduce or cancel their FEGLI Optional coverage altogether. The reasons include:
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Unmanageable Premiums: Costs can easily outweigh the benefits received.
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Reduced Need: Financial obligations such as mortgages and children’s education expenses have often ended.
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Better Alternatives: Some retirees shift to private policies obtained earlier or simply rely on savings.
Strategies to Manage FEGLI Costs Wisely
The key to avoiding FEGLI sticker shock is to plan early and act decisively.
Review Your FEGLI Elections Before Retirement
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Understand the differences between 75% reduction, 50% reduction, and no reduction options.
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Analyze how much life insurance you will actually need in retirement.
Scale Back Optional Coverage Before Premiums Spike
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Dropping one or more multiples of Option B before age 65 can prevent future premium pain.
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If you still need coverage, consider reducing to the minimum necessary.
Compare Alternatives Before You Retire
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Investigate purchasing a private term or whole life policy earlier in life when rates are lower.
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A well-planned private policy can eventually replace FEGLI if structured wisely.
Take Advantage of Open Seasons (When Available)
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Occasionally, OPM announces FEGLI Open Seasons, allowing employees and retirees to increase or adjust coverage without medical underwriting.
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However, these are rare; the last occurred in 2016.
Important FEGLI Dates to Remember in 2025
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Turning 65 in 2025: Major decision point about 75% reduction.
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Open Enrollment (if announced): Stay alert for any special notices from OPM.
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Annual Premium Adjustments: Typically reviewed annually, although most significant changes happen at five-year age milestones.
How to Decide if Keeping FEGLI is Worth It
When evaluating whether to keep FEGLI after retirement, you need to weigh multiple factors:
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Financial Obligations: Do you still have debts or family members who rely on your income?
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Health: Would you be insurable if you sought private life insurance now?
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Budget: Can you comfortably afford the escalating FEGLI premiums without harming your retirement lifestyle?
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Alternatives: Would a smaller policy or simply using retirement savings to cover final expenses be a better fit?
A retirement financial plan should include an honest assessment of life insurance needs, and FEGLI should not be assumed as a “set-it-and-forget-it” coverage.
Questions to Ask Yourself Before Continuing FEGLI
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Will my survivors genuinely need the insurance payout?
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Am I prepared for premiums to double, triple, or quadruple as I age?
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Would reducing or cancelling Optional coverage better serve my retirement income plan?
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Have I compared the costs and benefits of alternate life insurance options?
Next Steps to Take in 2025
If you are approaching retirement or already retired in 2025, here are immediate actions to take regarding FEGLI:
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Review your current FEGLI election choices.
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Contact a licensed professional listed on this website to discuss life insurance needs specific to your retirement goals.
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Understand the full premium costs based on your age and coverage level.
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Make a proactive decision rather than letting premiums dictate your budget later.
Staying Protected Without Overpaying
Life insurance remains an important part of a sound retirement plan, but that doesn’t mean you should blindly stick with your FEGLI elections. Understanding how your premiums behave after retirement—especially after age 65—can empower you to make better financial decisions. Carefully weigh your options and align your coverage with your true needs, so you can stay protected without overpaying.
Reach out today to connect with a licensed professional listed on this website who can help you review your FEGLI options and broader retirement planning needs.
