FEGLI in Retirement: The Decisions That Stay With You

For many federal employees, FEGLI is something that runs in the background throughout their career. Premiums come out automatically, coverage stays in place, and there is little reason to revisit it.

Retirement changes that.

Once you leave federal service, several FEGLI decisions become permanent, and some retirees do not realize how much flexibility disappears after they make their election.

First: Can You Keep FEGLI?

Before looking at coverage choices, you have to qualify to carry FEGLI into retirement.

To continue coverage, you generally must have been enrolled for the five years immediately before retirement, or for the entire period during which FEGLI was available to you if that period was shorter.

If you do not meet that requirement, FEGLI cannot continue into retirement. The remaining option is converting the policy to an individual plan, and that election must usually happen within 31 days after retirement.

Your Basic Coverage Does Not Stay the Same

Retirees who keep Basic FEGLI must choose how much of that coverage they want to preserve over time.

The standard election is the 75% Reduction option. If no choice is made, this is what happens automatically. Starting at age 65, or retirement if later, coverage gradually declines until only 25% of the original amount remains. Once reductions begin, there are no additional premiums.

The 50% Reduction option slows the decline. Coverage eventually settles at half of the original value, but retirees continue paying premiums.

The final choice is No Reduction, which keeps the full coverage amount for life. It also carries the highest ongoing cost.

One important detail often gets overlooked: once coverage is reduced or cancelled in retirement, you generally cannot reverse that decision later.

Optional Coverage Requires Extra Attention

Option A, the fixed $10,000 benefit, is fairly straightforward. Coverage stays level until age 65 and then gradually decreases until it reaches $2,500.

Option B deserves more scrutiny.

Many employees keep it during their career without thinking much about cost because payroll deductions feel manageable. In retirement, however, premiums rise with age and can become expensive over a long retirement.

Retirees can elect a reduction schedule that eventually phases coverage out, or keep the full amount and continue paying increasing premiums.

Option C, which covers spouses and dependent children, also continues into retirement but uses age-based pricing that increases over time.

A Retirement Decision Worth Reviewing Early

FEGLI elections are made as part of the retirement process using Standard Form 2818.

Because many of these choices cannot be changed later, it helps to evaluate them before retirement rather than while completing paperwork.

Your health, family situation, other insurance coverage, and overall retirement plan all play a role in determining whether FEGLI remains the right fit, particularly for retirees carrying significant Option B coverage.

A Federal Retirement Consultant (FRC®) can help you review your FEGLI choices alongside the rest of your retirement strategy and understand how they fit into the bigger picture.