Let’s talk about life insurance—something no one really likes to think about, but we all know is important. If you’re a federal retiree, you probably have some questions about how the Federal Employees' Group Life Insurance (FEGLI) program works once you leave the workforce. Don’t worry, we’ll break it down into simple, no-nonsense terms so you know what to expect.
What Is FEGLI?
First off, FEGLI is the life insurance program available to federal employees. It’s been around forever (since 1954, to be exact) and is the largest group life insurance program in the world. As a federal employee, you’re likely already enrolled in it. The big question is: what happens to your coverage when you retire?
Life Insurance Benefits for Federal Retirees
The good news is that FEGLI doesn’t disappear when you retire. Here’s how it works:
Basic Life Insurance:
Your basic coverage continues into retirement if you were enrolled in FEGLI for the five years immediately before retiring (or for the entire time it was available to you if less than five years).
The amount of your coverage equals your annual basic pay rounded up to the next $1,000, plus $2,000.
Example: If your salary was $82,400, your basic life insurance coverage would be $83,000 + $2,000 = $85,000.
Option A (Standard Optional Insurance):
Provides $10,000 in additional coverage.
Like the basic insurance, you need to have had this coverage for five years before retiring to carry it into retirement.
Option B (Additional Insurance):
Allows you to add up to five times your annual basic pay.
You’ll need to decide if you want to keep this after retirement because the premiums can get pricey as you age.
Option C (Family Coverage):
Covers your spouse and eligible children. You can choose up to five multiples of $5,000 for your spouse and $2,500 for each child.
How Much Does It Cost in Retirement?
FEGLI premiums don’t stop when you retire—they just get adjusted. Here’s what to expect:
Basic Insurance: You can choose a reduction option. At age 65, you can:
Reduce coverage to 25% of its original value (free after age 65).
Keep full coverage, but you’ll pay higher premiums.
Optional Insurance (A, B, and C): Premiums increase significantly with age. Many retirees drop some of these options to save money.
Should You Keep FEGLI in Retirement?
This depends on your situation. FEGLI can be a great safety net, but it’s not always the most cost-effective option. Here are a few things to consider:
Do You Still Need Life Insurance? If your mortgage is paid off, your kids are independent, and your spouse is financially secure, you might not need as much coverage.
Compare Costs: Check out private life insurance policies to see if they’re cheaper than keeping your FEGLI coverage.
Health Factors: If you’d have trouble qualifying for private life insurance due to health issues, keeping FEGLI might be your best bet.
How to Make Changes
If you want to adjust your FEGLI coverage when you retire, you’ll do it through the Office of Personnel Management (OPM). They’ll send you a form (SF-2818) when they process your retirement application. Fill it out carefully—it determines what happens to your life insurance moving forward.
Final Thoughts
Life insurance might not be the most exciting part of retirement planning, but it’s a key piece of the puzzle. FEGLI gives federal retirees flexibility and peace of mind, but it’s important to understand your options and costs. Take some time to evaluate what coverage makes sense for you and your family. And remember, you’ve got options, so make the choice that best fits your retirement goals.
