Making FEGLI Decisions After Retirement

When you retire, you have two options if you are participating in the Federal Employees’ Group Life Insurance (FEGLI) program. You must first choose which perks to maintain. The second step is to determine the price you are willing to pay for them.

You were automatically protected by basic insurance when initially recruited, unless you refused that coverage. The value of that insurance is your basic pay, which is the amount from which retirement contributions are deducted, rounded up to the nearest $1,000 plus $2,000.

Every time your basic pay increases, the dollar amount of coverage also increases. The government covers two-thirds of the premiums, and you pay the remaining one-third.

You will have three options for how much basic insurance you wish to maintain when you retire: a reduction of 75%, 50%, or no reduction.

If you choose a reduction of 75%, you will continue to pay the same rates for that insurance up to the age of 65 as you did while you were an employee. After age 65, you won’t be required to pay any premiums, but the value of your basic insurance will decrease by 2% each month until it is only worth 25% of its face value.

If you select the 50% reduction, it will be diminished by 1% each month until it is reduced to 50% of its original face value. You will have to pay more premiums in exchange for that improved benefit. The no-decrease choice will result in considerably higher rates for you. Therefore, if you choose the 50% reduction option or the no reduction option, you must determine the expense of doing so, both now and in the future.

There are three more types of life insurance outside of basic insurance:

Option A – Standard Insurance

The premiums you would pay for this $10,000 flat-rate coverage would cease at the end of the month you turn 65. After that, your Option A insurance will drop by 2% each month until it reaches 25% of its face value.

Option B – Additional

If you choose to be covered by Option B, you purchase an amount rounded up to the nearest $1,000 and equivalent to 1, 2, 3, 4, or 5 times your annual basic salary. You will be allowed to keep the insurance you received as an employee once you retire. If you continue to do so, you will be responsible for paying the full insurance cost, whose prices will rise as you get older.

Two ways to lower that cost are to change the number of multiples or allow the coverage’s monetary value to fall starting at age 65 at a rate of 2 percent per month for 50 months until it hits zero.

Option C – Family

Option C enables you to pay for coverage for your spouse and any qualifying dependent children under a single policy. You can choose up to five multiples of coverage, each multiple equaling $5,000 for your spouse and $2,500 for each of your children, much as Option B. Your age affects the premium cost per multiple.

The good news is that the insurance is free at age 65. The bad news is that it will gradually decrease until it approaches zero over a 50-month period at a rate of 2% every month.

Note: requirement to keep your FEGLI after retirement

You must have been registered in FEGLI for the 5 years before retirement or from your earliest chance to enroll to keep your insurance coverage(s) after retirement. You cannot keep your coverage if you don’t fulfill this requirement.

Converting your coverage after retirement

You must either discontinue your FEGLI coverage or change it to individual insurance if you are not qualified to keep it upon retirement (or do not want to). The insurance remains in effect for 31 days at no further expense to you following retirement.

To maintain continuous insurance protection, you must convert to an individual policy during the 31-day temporary extension of the coverage period, apply for the individual policy, and make the first premium payment to the insurance provider. You are responsible for covering the entire cost of the premiums. The exact sum will depend on your age, your risk group, and the monetary amount of the insurance you want to convert. 

Contact Information:
Email: [email protected]
Phone: 8889193252