FEGLI After Retirement: The Election That Quietly Gets Expensive
Emily A. Hall ·
Federal life insurance does not simply follow you into retirement. Carrying it requires meeting a requirement, and then making a choice that most people make by default.
The five-year requirement
To continue FEGLI Basic in retirement, you generally must have been enrolled for the five years immediately preceding retirement, or since your first opportunity to enroll. This mirrors the FEHB rule and catches people the same way — a lapse close to retirement can end the coverage permanently.
The election at 65
If you carry Basic into retirement, you choose how it behaves once you reach 65:
- 75% reduction. Coverage decreases by 2% per month after 65 until it reaches 25% of its original value, where it stays. Premium-free after 65.
- 50% reduction. Coverage decreases until it reaches 50% of its value. You continue paying an additional premium for life.
- No reduction. Coverage stays at full value. You pay for it for life, at the highest cost of the three.
Why the default is not always right
The 75% reduction is the option most retirees end up with, and for many it is genuinely the right answer. By 65, mortgages are often paid, children are grown, and the need for a large death benefit has diminished.
But it is worth being deliberate rather than passive. If you carry debt into retirement, support a dependent with ongoing needs, or your spouse's financial security depends materially on your income continuing, less reduction may be worth its cost.
The part that gets expensive
The optional coverage tiers — the additional multiples of salary many employees carry during their working years — are priced by age band, and the premiums rise steeply in later years.
Retirees sometimes carry optional coverage into their seventies without revisiting it, paying substantial premiums for insurance they may no longer need at that level, or which could be replaced more cheaply elsewhere depending on their health and circumstances.
What to do before you retire
- Confirm you meet the five-year requirement for Basic.
- Look at what each reduction election would actually cost you per month after 65.
- Ask what your family would actually need, rather than defaulting to whatever you have carried for twenty years.
- Review optional coverage separately — it is a different decision with different economics.
General education, not insurance advice. Confirm current premiums and elections with OPM's FEGLI resources.