Key Takeaways
- FEGLI Option B lets you increase life insurance coverage in multiples, but costs rise with age, and retirement-era choices affect benefits.
- Post-retirement reductions determine how much coverage continues and for how long, with clear rules on timing and amounts.
Hundreds of thousands of federal employees participate in FEGLI Option B, yet many remain uncertain about how coverage, costs, and reductions shift as retirement nears. Clarifying these details for 2026 helps you make informed choices and understand what to expect at each career milestone.
What Is FEGLI Option B?
General overview of FEGLI Option B
The Federal Employees’ Group Life Insurance (FEGLI) Program offers several life insurance coverage options. Option B is a voluntary, additional level of coverage available to eligible federal employees. While Basic insurance covers your annual pay rounded up to the next $1,000 plus $2,000, Option B lets you buy more coverage, increasing your financial protection within the program’s rules.
How coverage amounts are determined
With Option B, you can select one, two, three, four, or five times your annual pay (after rounding up to the nearest $1,000), but you do not need to insure for every possible multiple. This flexibility lets you tailor coverage to your family or financial needs, but only in these fixed increments. Any election is based on your pay as defined by the Office of Personnel Management (OPM), and changes take effect once a qualifying event or open season occurs.
Eligibility and enrollment basics
To be eligible for Option B, you first must have Basic FEGLI coverage. Typically, all new full-time federal employees are automatically enrolled in Basic, and you can apply for Option B within 60 days of being hired, after certain qualifying life events, or during rare open seasons authorized by OPM. FEGLI open seasons do not occur annually, so pay close attention to qualification requirements and timelines if you want to enroll or increase multiples.
How Does Option B Coverage Work?
Calculating multiples of coverage
Option B’s coverage is always calculated as a multiple of your annual basic pay (rounded up to the next $1,000). For instance, if your annual pay is $54,500, it rounds up to $55,000. Electing three multiples would then equal $165,000 in coverage. This structure remains consistent while you’re employed and as you approach retirement, though the cost will change over time.
Annual election changes and timing
Once enrolled, you may reduce your Option B multiples at any time, but you generally can only increase them after a qualifying life event (like marriage, birth, or divorce) or during an open season. Federal rules intentionally limit increases to prevent adverse selection, but you can reduce coverage throughout your service—especially as retirement nears and cost considerations change.
Impact on beneficiaries
Your Option B coverage is paid out, like all FEGLI insurance, to your designated beneficiaries upon your passing. You choose these beneficiaries on federal forms and can update them at any time. Unlike Basic coverage, Option B passes directly to the beneficiaries you name. Make sure your records are accurate, especially during major life changes.
How Are Costs Determined in 2026?
Factors affecting Option B premiums
Premiums for Option B depend on two main factors: your age and how many multiples you elect. The cost is based entirely on your age bracket and increases with each additional multiple. Because FEGLI is structured as group term life insurance, premiums increase in five-year increments as you age and are typically paid entirely by employees; there is no government contribution for Option B.
Age-related premium changes
As you reach new age brackets (such as turning 50, 55, 60, etc.), your premiums will automatically adjust to the new rate set for that range. Expect these adjustments in the first pay period after your birthday, when you enter a new bracket. This transparent, age-based system is predictable, though retirees may find these increases significant as they continue coverage later in life.
Changes in cost after retirement
If you continue Option B insurance into retirement, you can expect to keep paying premiums, which may grow steeper as you age. The amount and schedule of these payments depend on the reduction option you select (see below). Notably, most retirees will see costs shift after age 65, especially if they choose reduction options that decrease or eliminate coverage over time, which can eventually reduce costs.
What Reduction Options Exist?
80% reduction vs. no reduction explained
When retiring, you must choose how your Option B coverage will shrink—or not—over time. Two core choices exist:
- Full (80%) Reduction: Coverage drops by 2 percent per month starting at age 65 (or upon retirement if later) until it reaches 20% of the original value. Premiums for these reduced multiples stop after reductions are done.
- No Reduction: Coverage stays at the original multiples, and you continue paying premiums at the retiree rate as long as you maintain that coverage.
You can’t change this decision after retirement, so review the long-term financial and family impact before choosing.
How reductions begin and what to expect
Reductions start the first day of the month after your 65th birthday, or after retirement if you retire after 65. For the 80% reduction, your coverage decreases by 2% each month, gradually lowering the value that will eventually remain in place permanently. This process is automatic once you elect it, and you don’t need new paperwork to start the reductions.
Duration and timeline of reductions
The reduction period lasts 50 months (just over four years), at which point your Option B settles at 20% of the original insured amount. Once fully reduced, your premium payments for these multiples stop, though any multiples you elected for “no reduction” will require ongoing premiums for as long as you keep the benefit.
What Happens to Coverage After Retirement?
Keeping Option B as a retiree
You may carry Option B into retirement if you’ve had it for all of the five years right before retiring. The value and continuation depend on the reduction option you select. You cannot add Option B multiples after retiring, but you can stop coverage altogether at any time.
Rules for changing reduction elections
Reduction options for Option B must be made prior to or at the time of retirement. Post-retirement, you cannot switch between 80% reduction and no reduction. The only change permitted after retirement is full cancellation, meaning permanent loss of Option B coverage. This is another reason the election decision at retirement matters.
Common post-retirement considerations
After retiring, many former employees reconsider whether they need as much coverage, especially as costs rise and life circumstances change. Some reduce or drop coverage because dependents become self-sufficient, other insurance becomes sufficient, or budget needs shift. You can keep, reduce, or cancel Option B as a retiree, but cannot increase it.
