Key Takeaways
- FEGLI Basic coverage often becomes no-cost at age 65, but coverage may automatically reduce depending on your choices.
- Understanding reduction options, premium changes, and comparison to other benefits is essential for informed retirement planning.
As a federal retiree or an employee approaching retirement, it’s crucial to understand how the Federal Employees’ Group Life Insurance (FEGLI) program changes once you reach age 65. This guide walks you through premium adjustments, coverage reductions, and the unique rules that shape your benefits during this important transition.
What Is FEGLI After Age 65?
Overview of FEGLI basics
FEGLI is a group life insurance program for federal employees and retirees, administered by the U.S. Office of Personnel Management (OPM). It provides Basic coverage automatically for eligible employees, with optional coverage (Option A, B, and C) available at additional premium costs. The program’s purpose is to offer some financial protection to your survivors in the event of your death while you are an employee or after retirement.
How FEGLI coverage continues
If you retire with FEGLI, you may continue some or all of your coverage into retirement—provided you have met the eligibility requirements. Generally, you must have been covered by FEGLI for at least the five years immediately before retiring, or since your first opportunity to enroll. After age 65 (or at retirement, if later), FEGLI benefits and associated costs follow specific federal rules that can affect your future coverage and payments.
How Do FEGLI Premiums Change?
Premium rules at age 65
Once you reach age 65—or retire if that happens after 65—the cost of your FEGLI Basic coverage typically goes down. For many, this means you will no longer pay monthly premiums for Basic insurance, provided you accept an automatic reduction in coverage. This particular rule applies only to the Basic portion; optional coverages have their own rules and may still require payment.
No-cost basic coverage explained
For Basic FEGLI, the default is a 75% reduction option. With this, your premiums for Basic coverage end at age 65 or retirement (whichever is later). Coverage does not disappear, but it will decrease in value over time—specifically, it reduces by 2% of the pre-retirement amount each month until reaching 25% of the original value. Once fully reduced, this lower amount is maintained for life at no additional cost.
Optional coverage premium changes
Optional coverages (Options A, B, and C) do not automatically become no-cost at age 65. Their premiums may continue—and often increase—based on your age. You can select different reduction options or choose to maintain full coverage, but you must pay the corresponding premiums. Option A has a 75% reduction feature similar to Basic, but premiums for Option A stop at age 65 if you accept the reduction. Options B and C allow you to elect “Full Reduction” (resulting in no-cost coverage after reductions are complete) or “No Reduction,” which means continued full coverage with ongoing payments that increase with age.
What Happens to FEGLI Coverage Amounts?
Automatic reductions after age 65
By default, FEGLI Basic coverage begins to reduce after age 65 (or retirement, if later). The standard option decreases the amount steadily each month, until it is 25% of its original value. If you chose optional coverages, similar reduction patterns can apply, but with varying specifics and payment changes. Most people experience a drop in total life insurance value unless they elect to pay additional premiums to postpone reductions.
Choosing between reduction options
You are allowed to choose among different reduction rates for both Basic and certain optional coverage types before or at retirement—no reduction, partial, or full reduction. Opting for less reduction preserves more coverage for a longer period, but at the tradeoff of continued (and in some cases, increasing) premium payments. Your selection is typically locked in at retirement and cannot be changed later, so it’s important to review your options and understand the long-term consequences.
Impact on survivor protection
The decision on how much FEGLI coverage to retain after age 65 directly affects the benefit your survivors could receive. Automatic reductions may mean a smaller life insurance payout in the years following your retirement. Maintaining higher coverage might result in higher costs, but provides a larger amount to your beneficiaries if you pass away during retirement. Carefully weigh your coverage choices against your anticipated needs and the role FEGLI will play in your family’s broader financial picture.
Can I Change My FEGLI Coverage?
Open seasons and alternatives
Unlike other benefits, FEGLI does not have regular “open season” periods for making voluntary changes to your coverage. The only open seasons for FEGLI historically have been rare and unpredictable. However, qualifying life events—such as marriage, the birth or adoption of a child, or certain other circumstances—can allow for limited opportunities to adjust some optional coverage.
Rules for reducing or canceling
You may reduce or cancel FEGLI coverage at any time, including after age 65. However, increasing coverage or reinstating canceled coverage is limited and usually not permitted unless an open season occurs or a qualifying event applies. OPM guidelines specify that any reductions or cancellations are generally permanent and should be considered carefully.
Considerations before making changes
Before reducing or canceling FEGLI, think about your family’s ongoing needs, health, and other available resources. Because reinstatement is rare, a decision to decrease or drop coverage should be made with the long-term in mind. Comparing FEGLI to other retirement benefits or insurance options available to you can aid in a balanced decision, but changes should be approached methodically to avoid unintended gaps in protection.
What Should Federal Retirees Consider?
Financial planning implications
The change in FEGLI premiums and coverage after age 65 plays an important part in your post-retirement budget. A zero-cost Basic benefit may free up income, but the reduction in coverage could also reduce available resources for your survivors. Weighing how FEGLI fits with your other retirement benefits—such as your annuity, TSP, FEHB, and Social Security—will support clearer planning.
Comparison to other federal benefits
FEGLI is just one facet of federal retirement benefits. Each program—whether it’s TSP, annuities, or federal health insurance—has unique continuing coverage rules at retirement. Compared to those, FEGLI’s premium reductions are a distinct feature, but they must be coordinated with your overall benefit package to be most effective.
Common questions and challenges
Federal retirees commonly ask how to verify existing coverage, what to expect from reductions, or whether keeping optional FEGLI makes sense. Some find the reduction formulas or election options confusing, particularly since decisions made at or before retirement may be final. Reliable, up-to-date information from OPM can clarify these matters and support your planning.
