Retirement is a big milestone, and if you’re a federal employee, you might wonder what happens to your FEGLI benefits in retirement. The Federal Employees’ Group Life Insurance (FEGLI) program offers coverage while you work, but does it stay the same after you retire? Let’s break it down in a simple way so you can understand your options.
Does FEGLI Continue After Retirement?
Yes, but with changes! When you retire, your FEGLI coverage doesn’t automatically disappear, but it won’t remain exactly as it was while you were working. Instead, you get to choose how you want to keep or reduce your coverage.
Here’s what you need to know:
- Basic FEGLI Coverage: If you had it for at least five years before retiring, you can keep it.
- Option A (Standard Insurance): This reduces to a small amount after you retire.
- Option B & C (Additional & Family Coverage): You can keep them, but the costs increase.
If you don’t make any changes, your coverage will start decreasing once you hit 65 or retire, whichever comes later.
How Much Does FEGLI Cost After Retirement?
The cost of keeping FEGLI changes when you stop working. Your Basic FEGLI is free at age 65 if you choose the 75% reduction plan, meaning it gradually reduces over time. However, if you want to keep full coverage, you’ll need to pay more each month.
Here’s how the options compare:
- 75% Reduction: Free at 65 but drops in value.
- 50% Reduction: Costs a little but keeps half the coverage.
- No Reduction: Keeps full coverage, but the cost rises a lot.
For additional options (B & C), costs increase significantly as you age. Many retirees find that private insurance might be a better deal.
Should You Keep FEGLI or Look for Other Options?
Deciding what to do with your FEGLI coverage depends on your needs and budget. Some retirees choose to keep it because it offers peace of mind, while others find better options elsewhere.
Consider these factors:
- Your Health: If you have medical issues, keeping FEGLI might be easier than getting a new policy.
- Your Budget: FEGLI costs go up over time, so check if it fits your retirement income.
- Other Life Insurance Plans: Compare private policies to see if they offer better benefits for a lower price.
Many retirees work with experts from My Federal Retirement Help, to compare their options and make an informed decision.
What Happens If You Do Nothing?
If you don’t make a choice, your coverage automatically follows the 75% reduction plan. This means your Basic FEGLI remains free at 65 but shrinks over time. If you have extra coverage (Option B & C), those will continue at a higher cost unless you cancel them.
How to Plan for FEGLI in Retirement
A solid retirement plan includes knowing how your benefits will change. The best way to do this is by calculating your pension, expenses, and insurance needs. A federal pension plan calculator can help you estimate how much income you’ll have and how much insurance you may still need.
To avoid costly mistakes, request a retirement review with My Federal Retirement Help and receive a free analysis report. This will give you a clear picture of your best options so you can retire with confidence.
Don’t wait until retirement catches you by surprise! Communicate with My Federal Retirement Help today and let’s build a retirement plan that works for you!
