FEGLI in Retirement: How the Reduction Elections Change Your Coverage

Federal Employees' Group Life Insurance is one of the better-known federal benefits, and it is often a good one. The mistake is assuming the coverage you have at work is the coverage you will have at 75. FEGLI can continue into retirement. It can also shrink, cost more, or both, depending on choices you make once, on a form.

Can you keep it?

OPM sets two main conditions for carrying FEGLI into retirement. You must have been insured for the 5 years immediately before retirement, or for the full periods of service when coverage was available if that was less than 5 years. And your annuity must start within 30 days. The rule applies separately to Basic and to each Option, so you can meet it for Basic and miss it for an Option you added late.

OPM is clear that it has no authority to waive these requirements. If you are a few years from retirement and added an Option recently, check this now.

The Basic reduction election

At retirement you choose what happens to Basic coverage once reductions begin. Reductions begin the second month after you turn 65 or the second month after you retire, whichever is later. If you retire before 65, you keep paying premiums until then.

If you do not make an election, OPM says Basic defaults to the 75% reduction.

None of these is right for everyone. The 75% reduction costs nothing later and leaves a smaller benefit. The other two keep more coverage for people who will need it, at a lifetime cost paid from the annuity.

Options A, B and C after 65

Options reduce as well, starting at 65 or retirement, whichever is later.

• Option A reduces to $2,500 and then has no premium. There is no No Reduction choice for Option A.
• Options B and C let you choose Full Reduction, which ends the premium and reduces coverage by 2% a month over 50 months to zero, or No Reduction, which keeps the coverage and the premium. Without an election, B and C take Full Reduction.

Coverage versus the survivor annuity

FEGLI pays a lump sum to your beneficiaries. A survivor annuity, elected separately at retirement, pays your spouse a monthly amount and reduces your own annuity. They answer different questions: one is "what does my family receive at once," the other is "what does my spouse receive every month." Many families need to look at both together.

Conversion: the deadline nobody plans for

If FEGLI ends involuntarily, for example when you leave federal service or retire without meeting the 5-year rule, OPM lets you convert to an individual policy without new medical underwriting. The deadline is typically 60 days after the event, or 31 days after your agency's notice, whichever comes sooner. Converted coverage is individual, cash-value coverage, and premiums are higher than the group rate.

A good way to decide

1. Run your own numbers in OPM's FEGLI calculator. It shows amounts and premiums before and after retirement.
2. Write down what your family would need at 65, 75 and 85: mortgage, income, final costs, anyone who depends on you.
3. Compare those needs to what each election would leave.
4. If there is a gap, compare the lifetime cost of keeping a FEGLI option with individual coverage, if your health allows.

Illustrative scenario, not a real customer. A federal employee plans to retire at 62 with a spouse who would rely partly on a survivor annuity and a mortgage with eight years left. Under the 75% reduction, Basic would shrink in the years the mortgage is still being paid. That might be fine if savings cover it, or it might argue for a different election or separate coverage for the mortgage years. The point is to see it before choosing.

When FEGLI may be all you need

• Your elected coverage plus savings already fits what your family would need.
• Your mortgage is paid and no one depends on your annuity alone.
• You chose No Reduction knowingly and the premiums fit your budget.

If you want a second set of eyes, review your FEGLI plan in a few taps or read the federal employee guide. OPM and your agency are the source for your benefits.

Keep in mind

Cornerstone Capital is an independent life insurance brokerage, not OPM or any government agency. We do not administer FEGLI or change elections. Rules change; confirm with OPM and your agency. Sources checked October 14, 2026.