FEGLI Option B: 5 Critical Facts to Avoid Costly Premiums | Fed Pilot

The short answer: FEGLI Option B is additional life insurance worth one to five times your annual basic pay, rounded up to the next $1,000. You pay the full premium, and the cost rises in five-year age bands. At retirement you choose Full Reduction or No Reduction, which decides whether coverage shrinks to zero after age 65.

Key Takeaways

• FEGLI Option B provides coverage in multiples of 1, 2, 3, 4, or 5 times your annual basic pay, per the OPM FEGLI Handbook.
• Your salary is rounded up to the next $1,000 before the multiple applies.
• Premiums are age-banded, rise every five years, and the employee pays the entire cost.
• At retirement you elect Full Reduction or No Reduction for coverage after age 65.
• Carrying FEGLI into retirement generally requires coverage for the 5 years immediately before you retire.

How does FEGLI Option B work?

FEGLI Option B is the “Additional” layer of the Federal Employees’ Group Life Insurance program. The OPM FEGLI Handbook explains the choices. You may elect coverage equal to one, two, three, four, or five times your annual rate of basic pay. Your pay is first rounded up to the next $1,000.

Here is a simple example. Say your salary is $82,400. It rounds up to $83,000. Three multiples of Option B would then provide $249,000 in coverage. The multiples let you match coverage to your family’s needs.

Option B sits on top of Basic insurance. It works separately from Option A and Option C. Because it can reach five times salary, it is often the largest optional piece federal employees carry. Our post on FEGLI Option C covers the family coverage layer, which uses fixed multiples instead.

Why do FEGLI Option B premiums rise with age?

FEGLI Option B premiums are age-banded. That feature catches many people off guard. The employee pays the full cost, with no government contribution toward optional insurance. Each time you enter a new five-year age band, the rate per $1,000 of coverage increases.

The increases start small at younger ages. They grow steeper later. For someone carrying five multiples, the jump at ages 60 and beyond can be significant. That pattern is why some federal employees revisit their Option B election as they approach retirement. They weigh the coverage against the rising cost.

Because the rates depend on your age and salary, a personalized estimate beats a general figure. OPM’s FEGLI calculator lets you model different combinations of coverage. It shows the current withholdings for each one.

How does Option B compare to the other FEGLI pieces?

It helps to see where Option B fits. Basic insurance is the foundation, and the government pays part of its cost. Option A, called Standard, adds a flat $10,000. Option B, Additional, adds the salary multiples described above. Option C, Family, covers a spouse and eligible children.

Option B stands out for two reasons. It can grow the largest, up to five times pay, and its cost climbs the most with age. You can also carry several multiples and later reduce only some of them at retirement. That flexibility lets you keep some coverage while trimming cost. Reviewing all four pieces together often gives a clearer picture than looking at Option B alone.

What are the FEGLI Option B choices at retirement?

The FEGLI Option B decision at retirement centers on the post-65 reduction election. You choose Full Reduction or No Reduction. The two paths lead to very different outcomes.

With Full Reduction, your premiums stop the month after your 65th birthday. The coverage then reduces gradually until it reaches zero. With No Reduction, the coverage stays in force, but you keep paying the age-banded premiums for life. Neither choice is automatically better. It depends on whether you value keeping the coverage or ending the cost.

There is also an eligibility gate. To carry any FEGLI coverage into retirement, you generally must have been enrolled for the five years immediately before retirement, or since your first chance to enroll. This mirrors the health-insurance timing rule in our post on the FEHB five-year rule. For how Basic insurance reduces after 65, see our guide to FEGLI Basic reduction.

How can you estimate your coverage and cost?

Estimating your own numbers is the practical next step. Start with your current salary. Round it up to the next $1,000. Multiply by the number of Option B multiples you carry. That gives your coverage amount.

For cost, the FEGLI calculator applies the current age-band rate to your coverage. It may help to run the numbers at your current age and again at 65 and 70. That way, the future cost of a No Reduction election is visible today. Seeing the numbers side by side often makes the choice between keeping and dropping coverage clearer. This is information to help you compare options, not a recommendation to keep or drop coverage. Many federal employees find it useful to review these choices with a qualified professional who can weigh insurance needs against other resources.

When do federal employees reconsider Option B?

Life changes often prompt a fresh look at Option B. A paid-off mortgage, grown children, or a growing TSP balance can lower how much life insurance a household needs. As those needs fall, the rising age-band premiums can feel harder to justify.

Other employees keep Option B for specific reasons. Some want liquidity for a spouse, final expenses, or estate goals. Others compare the group rates to a private term policy. A medically underwritten policy may cost less or more, depending on health and age. There is no single right answer here. It depends on your budget, your health, and the rest of your plan. Reviewing the choice every few years, and again as retirement nears, helps many federal employees keep coverage aligned with their needs.

Frequently asked questions about FEGLI Option B

How much coverage can Option B provide?
One to five times your annual basic pay, after rounding your salary up to the next $1,000.

Does the government pay part of the premium?
No. The employee pays the entire premium for Option B, unlike Basic insurance, which the government partly funds.

Why did my premium jump?
Option B premiums increase each time you enter a new five-year age band. The largest increases tend to occur at older ages.

What is the difference between Full Reduction and No Reduction?
Full Reduction stops premiums after age 65 and lets coverage reduce to zero. No Reduction keeps coverage in force but continues the premiums.

Can I keep Option B in retirement?
Generally only if you carried it for the five years immediately before retirement, or since you were first eligible.

Where can I see my exact cost?
The OPM FEGLI calculator applies current age-band rates to your coverage, so you can see the withholding for each option.

Learn more at a free Fed Pilot workshop

FEGLI Option B can be a large part of a federal employee’s insurance picture. The retirement choices deserve a close look. Fed Pilot offers free educational workshops. They explain FEGLI, the reduction elections, and how life insurance fits alongside your pension and TSP. Register for a free Fed Pilot workshop to review your options with clear, unbiased information.