FEGLI After Retirement: How Your Life Insurance Coverage Changes When You Leave Federal Service

Federal employees are automatically enrolled in FEGLI Basic life insurance — but most don’t fully understand what happens to that coverage when they retire. Your FEGLI doesn’t disappear at retirement, but it does change in important ways. The optional coverages you carry during your career may become very expensive to maintain. And the decisions you make in the 12 months before retirement lock in your coverage for life.

Here’s what every federal employee approaching retirement needs to know about FEGLI before they make any decisions they can’t undo.

What Is FEGLI, and What Does It Cover?

FEGLI is the Federal Employees’ Group Life Insurance program, administered by the Office of Personnel Management (OPM) and underwritten by MetLife. Coverage is organized into four parts:

• Basic Insurance: Automatically enrolled; equal to your salary rounded up to the nearest $1,000 plus $2,000. OPM pays one-third of Basic premiums; you pay two-thirds.
• Option A – Standard: Flat $10,000 in additional coverage. You pay the full premium.
• Option B – Additional: 1x to 5x your salary in additional coverage. You pay the full premium.
• Option C – Family: Covers eligible family members (spouse and eligible children). Comes in 1x–5x multiples of a flat coverage unit ($5,000 per unit for spouses, $2,500 per unit for children). You pay the full premium.

For a comprehensive overview of FEGLI amounts and whether you need the coverage, see our earlier post: FEGLI Explained: How Much Life Insurance Do Federal Employees Actually Need?

The Retirement Eligibility Requirement

To carry FEGLI into retirement, you must meet two conditions. First, you must be entitled to retire on an immediate annuity (a monthly pension that begins at retirement, not a deferred or postponed annuity). Second, you must have been enrolled in FEGLI for the five years immediately before your retirement date, or since your first opportunity to enroll — whichever is shorter.

If you meet these conditions, you have the right to continue FEGLI coverage into retirement. If you don’t, your FEGLI coverage ends when you leave federal service.

How FEGLI Basic Changes After Retirement

Once you retire, your Basic FEGLI begins a gradual reduction process — unless you opt out. OPM offers three elections for Basic coverage in retirement:

75% Reduction (Free Option)

This is the default for most retirees. Starting at age 65 (or after you’ve been retired for 12 months, whichever is later), your Basic coverage reduces by 2% of the face amount each month. After 36 months, it settles at 25% of its pre-retirement value. You pay no premiums for this option once you hit age 65.

50% Reduction

Your Basic coverage reduces by 1% of the face amount each month beginning at age 65, settling at 50% of the original value after 50 months. You pay a small monthly premium — approximately $0.32 per $1,000 of coverage — to maintain this slightly higher floor.

No Reduction

Your Basic coverage stays at its full pre-retirement amount for the rest of your life. This costs approximately $0.72 per $1,000 of original coverage per month, beginning at age 65 and continuing for life. This is the most expensive option but preserves the full benefit for your heirs.

You must elect your Basic reduction option at retirement. You cannot change it later. If you make no election, OPM defaults to the 75% reduction option.

What Happens to Options A, B, and C?

Option A – Standard ($10,000)

If you keep Option A into retirement, it remains at $10,000 until age 65, then reduces by 2% per month until it reaches $2,500 (25% of the original value). No premiums are charged during this reduction phase or after the reduction is complete — the coverage essentially becomes free as it shrinks.

Option B – Additional (1x–5x Salary)

Option B is where many retirees face sticker shock. Unlike Basic and Option A, Option B does not automatically reduce in retirement. You can choose to keep it at the full multiple of your pre-retirement salary, but the premiums increase significantly with age — and they keep going up. As of 2026, premiums for Option B increase dramatically for retirees in their 60s, 70s, and beyond because they are based on age bands.

You can elect to have your Option B reduce by 2% per month beginning at age 65 (similar to Basic), which brings premiums down as coverage shrinks. Alternatively, you can elect no reduction — meaning you keep the full coverage forever, at increasingly steep premiums. Many retirees drop Option B entirely because private term or permanent life insurance purchased earlier in their career often offers better value by retirement age.

Option C – Family

Like Option B, Option C continues in retirement with the same election choices — keep it at full coverage with aging premiums, allow it to reduce, or cancel it. If your children are no longer dependents (typically after age 22 or marriage), the spouse coverage under Option C may still be worth keeping — but compare it against the cost of standalone coverage first.

Can You Cancel FEGLI After Retirement?

Yes. You can cancel any of your optional coverages (A, B, or C) at any time in retirement. However, once cancelled, you cannot re-enroll. Basic coverage cannot be cancelled voluntarily in retirement — it continues (with or without reduction) until your death.

This one-way door is critical to understand. If you cancel Option B and later experience a health change that makes private insurance unaffordable, you can’t reinstate your FEGLI coverage.

FEGLI and the Survivor Benefit Decision

Some retirees use FEGLI to complement their FERS survivor benefit election. If you elect a reduced or no survivor annuity to protect more of your monthly pension, a FEGLI policy can serve as a safety net to ensure your spouse has financial resources if you die first.

That said, FEGLI is term-style life insurance without a cash value component. It’s not a wealth-building tool — it’s pure income replacement. For most couples approaching retirement, the FERS survivor annuity and a well-funded TSP provide more financial stability than a large FEGLI policy. To understand the survivor benefit election, see: FERS Survivor Benefits: What Happens to Your Spouse When You’re Gone?

Key Questions to Ask Before Retirement

As you approach your retirement date, work through these questions with your HR benefits counselor and any financial advisors you work with:

• Do I have dependents who would struggle financially if I died in the first 5–10 years of retirement?
• Does my spouse have independent retirement income, or are they largely dependent on my pension?
• How much would it cost to replace my FEGLI coverage with a private policy?
• What is the long-term premium cost of keeping Option B at my age?
• Have I elected a FERS survivor benefit, and if so, how does that affect my need for FEGLI?

There’s no universal right answer. Some retirees find the No Reduction Basic option is worth it for the peace of mind. Others cancel optional coverages immediately because private insurance or a funded TSP account makes more sense. The key is making an informed, intentional choice — not defaulting to whatever you had during your career.

How to Make Your FEGLI Election

Your FEGLI elections at retirement are made on Standard Form 2818 (SF 2818), which you submit to your HR office as part of your retirement application package. Your HR benefits counselor can walk you through the form and explain how your specific elections will affect your premiums and coverage amounts.

OPM also provides FEGLI premium tables and coverage calculators at OPM.gov/healthcare-insurance/life-insurance.

The Bottom Line

Your FEGLI coverage at retirement is a one-time decision with lifelong consequences. The default options — 75% Basic reduction, options A/B/C continuing at full cost — may not be the best fit for your situation. Run the numbers, compare alternatives, and make a deliberate election before you submit your retirement paperwork.

Want to make sure you understand all the moving parts of your federal benefits before you retire? Reserve a free seat at a Fed Pilot retirement workshop at fedpilot.com/#register. Our educators cover FEGLI, FEHB, FERS pension, TSP, and Social Security in one comprehensive session — at no cost to you.