Federal employees often rely on FEGLI (Federal Employees’ Group Life Insurance) for coverage during their working years. But when retirement comes, many are surprised by the rising FEGLI basic life insurance cost. Is it still worth keeping? Let’s break it down in a simple way.
How FEGLI Works Before and After Retirement
During your career, FEGLI deducts premiums from your paycheck. This makes it easy to manage without noticing the cost. However, after retirement, the structure changes. Premiums are no longer deducted from a steady paycheck but are instead taken from your retirement annuity.
Here’s the catch: While basic coverage remains the same, the cost of keeping it increases—especially after you turn 65. Many retirees realize too late that their life insurance costs are no longer affordable.
The Hidden Costs of FEGLI After Retirement
Once you retire, your premium rates rise in five-year age brackets. This means that what once seemed like an affordable option becomes a financial burden over time. Let’s look at what happens:
- Before Age 65: You pay the same rate as during your career.
- At Age 65: If you choose to keep full coverage, premiums jump significantly.
- Beyond Age 65: Every five years, your premiums increase again.
For some retirees, these rising costs can be overwhelming. If you are unaware of the increases, you may be caught off guard when your retirement income isn’t enough to cover them.
FEGLI Options for Retirees
If the cost is too high, you have a few choices:
- Keep Full Coverage – This means accepting higher premiums as you age.
- Reduce Coverage – You can lower the benefit amount to control costs.
- Cancel FEGLI – If it’s too expensive, you can look for alternatives.
Many retirees find that private life insurance policies offer better value at lower costs. If you act before retiring, you may qualify for better rates than FEGLI.
What Are the Alternatives to FEGLI?
Exploring private life insurance could save you money. Many companies offer competitive policies tailored to retirees. These plans often provide:
- Fixed Premiums – No sudden increases every five years.
- Custom Coverage – Choose a plan that fits your needs and budget.
- Long-Term Savings – Over time, a private policy could be cheaper than staying with FEGLI.
Should You Keep or Drop FEGLI After Retirement?
Deciding what to do with your FEGLI policy depends on your financial situation and future needs. Here are a few questions to ask yourself:
- Can I afford higher premiums later?
- Do I still need the same level of life insurance?
- Would private insurance save me money?
If you’re unsure, My Federal Retirement Help can guide you through your options. They specialize in helping federal retirees find the best insurance solutions.
Last Words: Plan Ahead for Smarter Choices!
FEGLI can be a great benefit while you’re working, but after retirement, the cost may outweigh the benefits. It’s important to review your coverage early and explore alternatives. Making a switch to a more affordable plan could save you thousands over time.
Also, keep in mind how federal retirees and medicare fit into your overall financial planning. The right insurance decision will protect not just you but also your loved ones.
Need help figuring out the best life insurance plan for your retirement? Visit My Federal Retirement Help today and secure a smarter future!
FAQs
- Why does FEGLI cost more after retirement?
FEGLI premiums increase every five years after 65, making it much more expensive to maintain coverage.
- Can I reduce my FEGLI coverage after retirement?
Yes, you can choose a reduced coverage option to lower costs.
- Is private life insurance cheaper than FEGLI?
In many cases, yes. Private policies often have fixed premiums and flexible options.
- When should I review my FEGLI options?
It’s best to review your options before retirement to avoid unexpected premium hikes.
- Who can help me with my FEGLI decisions?
My Federal Retirement Help offers expert guidance to federal retirees exploring their insurance choices.
