What Happens to Your FEGLI Coverage in Retirement?

September 10, 2025

For federal employees, FEGLI—Federal Employees’ Group Life Insurance—is a benefit that provides peace of mind throughout your career. But as retirement approaches, many wonder: What really happens to FEGLI once the paycheck stops?

At Independence Benefits, we help federal employees navigate the complexities of FEGLI, FERS, TSP, FEHB, and other benefits so they can retire with confidence. Let’s take a closer look at how FEGLI works, how it changes in retirement, and what options you have.

How Does It Work?

FEGLI offers flexibility, but each coverage type behaves differently:

Basic Coverage: Includes an extra benefit if you’re under age 45—doubling your coverage at no additional cost.
Option A: A flat $10,000 benefit, regardless of salary.
Option B: Coverage based on multiples of your salary (1–5x). Premiums rise every five years and can become very expensive after age 60.
Option C: Family coverage—up to $25,000 for a spouse and $12,500 per child, depending on how many multiples you elect

FEGLI in Retirement
When you retire, your FEGLI coverage doesn’t simply vanish—but it does change. Here’s how:

Basic Coverage: You can choose:
- 75% Reduction Option – Your coverage reduces 2% per month starting at age 65 (or retirement, if later), until it reaches 25% of your original amount. No cost after reductions start.
- 50% Reduction Option – Coverage reduces to 50%, with lower premiums.
- No Reduction Option – Keeps full coverage, but premiums are higher.
Optional Coverages (A, B, C):
- Generally, these options get more expensive with age.
- Most reduce or end after retirement unless you specifically elect to keep them—and premiums can be steep.

The Cost Factor
FEGLI can become expensive in retirement, especially Optional coverage. Many retirees reevaluate whether they still need the same amount of life insurance—or whether private coverage or other planning tools make more sense.

What Happens Next?

This is where planning comes in. In a free life insurance review, we can help you:

Break down your FEGLI options and retirement costs.
Determine how much coverage you actually need—so you’re not overpaying or under-protected.
Identify any free or low-cost coverage you may qualify for.
Compare FEGLI’s family coverage with private alternatives.
Get expert, no-pressure guidance on paperwork, deadlines, and elections.

FEGLI is a valuable benefit, but it’s not one-size-fits-all in retirement. Costs can escalate, and coverage may not align with your needs. By reviewing your options, you can keep the protection that matters most while avoiding unnecessary expenses.

👉 Ready to review your FEGLI coverage before retirement? Contact Independence Benefits today at [email protected] or 256-443-9964 to schedule your personalized life insurance review.