Many federal employees think about their retirement annuity long before they think about their life insurance. Yet FEGLI coverage can change significantly when employment ends, and that change often catches people by surprise.
Why Coverage Changes
FEGLI is group term life insurance. While you are working, premiums are normally deducted from your pay. Coverage that continues into retirement is handled differently: premiums are generally withheld from the annuity, and depending on the reduction option you choose, the Basic insurance amount may decline after age 65. Continuing coverage into retirement depends on your enrollment history, so the rules can be strict. Confirm the exact requirements with OPM before you rely on them.
Continuing coverage into retirement generally depends on your enrollment history, so the rules can be strict. Confirm the exact requirements with OPM before you rely on them.
Questions to Ask Before You Leave
- Which FEGLI coverage do I have now, and which parts might continue after retirement?
- Will my coverage reduce at a certain age, and how much?
- Who would need a benefit if I died, and is that need still there after retirement?
- Is my beneficiary designation current and accurate?
- Would I need to pay premiums directly, and can I afford that over time?
Connect Insurance to the Rest of Your Plan
Life insurance decisions should be considered alongside your annuity survivor elections, TSP beneficiary designations, and any other policies you hold. Looking at these together can reveal duplicate coverage or gaps.
For a full overview of the program, see the FEGLI Guide. For personal insurance advice, a licensed insurance professional can review your situation.
The Five-Year Rule
One of the most important requirements is the five-year rule. In general, you must have been covered by the insurance for the five years immediately before you retire, or for the full period it was available to you if that was shorter. If you drop FEGLI Basic, convert it, or have a gap in coverage, you may lose the right to continue it into retirement. This rule is also why it is risky to cancel optional coverage in the years before retirement without first checking its impact.
How the Reduction After Age 65 Works
When you continue Basic coverage into retirement, you choose between three reduction schedules: a 75 percent reduction, a 50 percent reduction, or no reduction. The reduction generally begins in the second month after your 65th birthday or your retirement date, whichever is later. With a 75 percent reduction, your coverage declines monthly until 25 percent of the original amount remains, and the retiree does not pay for it. With a 50 percent reduction, coverage declines until half the amount remains, and with no reduction the full amount stays in place. In the second and third cases, premiums are withheld from the annuity. Premium rates change, so use the current schedule from OPM.
What If You Are Not Eligible to Continue?
If you do not meet the continuation rules, OPM has no authority to waive them. In many cases you will have the opportunity to convert your group coverage to an individual policy, generally within a short window after your coverage ends. Individual policies cost more than group coverage and may be difficult to compare, so decide early whether you need life insurance at all.
A Short Pre-Retirement Checklist
- Ask your human resources office for a record of your FEGLI enrollment and the dates it began.
- Confirm your annuity will start within 30 days of your retirement date, or note that coverage is suspended in some cases, such as MRA+10 retirement.
- Decide which reduction option fits your family’s needs and budget.
- Review your beneficiary designation (Standard Form 2823) and update it if needed.
- Compare your survivor annuity, TSP and any private policies so you do not pay for gaps or duplicates.
Frequently Asked Questions
Can I keep all my optional coverage in retirement?
Optional coverage can generally continue only if you can continue Basic and have had the option for the five-year period. Premiums and reductions differ by option, so check the details.
Does my coverage end on my last day of work?
If you do not continue it, the coverage ends, and there is generally a short extension and a conversion window. Ask your human resources office for the exact dates.
Who do I contact after I retire?
OPM retirement services handles FEGLI for retirees, and beneficiary records are not available online.