FEGLI Life Insurance: Is It Worth Keeping Into Retirement?

You’re about to retire. You’ve worked decades. You’ve done the hard part.

Then you hit the FEGLI question:

“Do I keep my federal life insurance… or drop it before it gets crazy expensive?”

If you’ve looked at the FEGLI retirement cost charts, you already know the punchline: FEGLI can get very expensive as you age. But dropping it can feel scary—especially if someone depends on your income, or you don’t have other coverage lined up.

This guide walks you through what FEGLI is, how it changes in retirement, and when it’s actually worth keeping FEGLI. I’ll use plain language, real examples, and simple steps you can follow.

Official reference points you can trust: OPM.gov (the source for FEGLI and retirement rules) and the OPM insurance pages like OPM healthcare and insurance.

FEGLI retirement basics: what you really have (and what it costs)

FEGLI stands for Federal Employees’ Group Life Insurance. It’s the main federal life insurance program for federal workers.

FEGLI is made up of “parts”:

Basic insurance (Basic)

Coverage is usually your salary rounded up to the next $1,000, plus $2,000.
Example: salary $82,400 → rounds to $83,000 → Basic = $85,000.
While you work, you pay for it each pay period.
In retirement, you can choose how much of Basic you keep:
- 75% reduction (coverage shrinks a lot; usually the cheapest long-term)
- 50% reduction
- No reduction (keeps full Basic; usually the most expensive long-term)

Optional insurance (Option A, B, and C)

Option A: flat $10,000
Option B: 1 to 5 multiples of salary (big coverage, big cost later)
Option C: family coverage (based on “multiples” for spouse and eligible children)

The big “gotcha” in FEGLI retirement is this:

Basic can become cheap (or even $0) if you choose the 75% reduction.
Option B and C can become very expensive with age—often the main driver of high cost retirement numbers.

For the most current rules and details, start with OPM’s main website and look up FEGLI under Insurance.

The key FEGLI retirement rule: you must be eligible to keep it

You can’t always keep FEGLI forever just because you want to.

In general, to carry FEGLI into retirement, you must:

retire on an immediate annuity, and
have been covered by FEGLI for the 5 years right before retirement (or from your first chance to enroll, if less than 5 years)

This “5-year rule” surprises people.

If you’re close to retirement, confirm your FEGLI coverage now so you don’t get stuck later. OPM is the official source for the rules: OPM.gov.

Is it worth keeping FEGLI in retirement? Start with what life insurance is for

Life insurance is meant to cover a financial loss when you die. That loss is usually:

income your spouse needs to pay bills
a mortgage or rent
kid expenses (college, childcare)
debts
final expenses

If nobody depends on your income and you’ve built savings, the need often drops a lot in retirement.

That’s why “worth keeping FEGLI” is not a yes/no answer. It depends on:

who depends on you
how much cash you have
your health (can you qualify for private insurance?)
how long you expect to keep coverage
whether you mainly need insurance for 5 years… or 25 years

Real FEGLI retirement cost examples (with simple math)

FEGLI rates change over time, and OPM publishes rate charts. So treat the numbers below as realistic examples to help you think. Before you decide, check your exact rates and elections using OPM’s FEGLI info at OPM.gov.

Example 1: “I just want enough to bury me”

Pat, age 62, retiring under FERS

Salary at retirement: $85,000
Basic coverage: about $87,000 (rounded + $2,000)

Pat has:

no mortgage
grown kids
spouse has their own pension
$450,000 in TSP + savings

Pat mostly wants a cushion for final expenses and a little extra for their spouse.

A common FEGLI retirement move here:

Keep Basic with the 75% reduction
Drop Option B (if they have it)
Consider dropping Option C if kids are grown and spouse doesn’t need it

What does that mean?

Basic starts at about $87,000.
With 75% reduction, it eventually shrinks to about $21,750.

For many retirees, that smaller amount is enough to cover:

funeral costs (often $8,000–$15,000)
a few months of bills
small debts

For Pat, this is often worth keeping FEGLI because it keeps a basic safety net without paying high long-term costs.

Example 2: “I still have a mortgage and a spouse who needs my pension”

Renee, age 60, retiring soon

Salary: $120,000
Basic: about $122,000
Has Option B = 5x salary (about $600,000)
Mortgage balance: $280,000
Spouse depends on Renee’s income and is not working

Renee’s big question: Is it smart to keep that $600,000 Option B into retirement?

Here’s the reality: Option B is usually the budget-buster in retirement. Costs rise as you age. It can feel “cheap” while you’re working, then turn into a monthly bill you hate later.

A strategy that often works better:

Keep Basic (maybe 75% reduction)
Keep some Option B for a limited time (like 5–10 years), then cancel later
Or replace Option B with a level-term policy (if healthy enough)

Why?

Renee’s biggest risk is the next 10 years (mortgage + spouse transition).
After 10 years, the mortgage might be much smaller, and Renee’s spouse may have adjusted.

This is where you match insurance to the “need window,” not your fear.

Second angle: FEGLI retirement decisions look different for military retirees and disabled retirees

A lot of FedInfo.org readers have military time, VA benefits, or both. That changes the picture.

If you’re a military retiree too

You may have:

military retired pay
Survivor Benefit Plan (SBP) choices (if you elected it)
access to TRICARE

Those benefits can reduce how much life insurance you truly need.

Helpful official sources:

TRICARE basics: TRICARE
Military transition and planning: Military OneSource
VA benefits overview: VA.gov

Important: SBP is not life insurance, but it can replace income for a spouse. If your spouse is protected by SBP plus your FERS survivor benefit, you may not need as much FEGLI Option B.

If you’re retiring on disability or have serious health issues

Private life insurance may be:

very expensive, or
not available at all

In that case, FEGLI can be a “keep what you can get” situation.

If you’re dealing with a job-related injury or illness, you may also be navigating workers’ comp. Official info: DOL OWCP.

For some people in poor health, worth keeping FEGLI becomes more about access than price.

Practical “worth keeping FEGLI” scenarios (three common people)

Below are three simple scenarios to help you compare options. These are not perfect, but they show the thinking.

Scenario A: Single retiree, no dependents

Goal: final expenses + small gift to family
Often best fit:
- Basic (75% reduction)
- Drop Option B
- Drop Option C

Why: You likely don’t need big coverage for 20+ years.

Scenario B: Married, spouse depends on your income

Goal: replace income for spouse
Often best fit:
- Keep Basic (75% or 50% reduction)
- Keep some Option B short-term, then reassess
- Compare with a private term policy (if healthy)

Why: You might need more coverage now, less later.

Scenario C: Still raising kids or supporting a disabled adult child

Goal: long-term protection for dependents
Often best fit:
- Consider keeping more coverage longer
- But be careful: long-term FEGLI Option B cost retirement increases can collide with fixed income

Why: Your “need window” may be long, so you must plan for long-term affordability.

Common FEGLI retirement misconceptions that cost people money

“FEGLI is always cheaper because it’s through the government”

Not always. FEGLI can be convenient, but the cost retirement jump—especially for Option B and C—can be steep.

“If I drop it, I can just get it back later”

Usually no. Outside of special life events or open seasons (rare), you can’t just re-enroll whenever you want. And in retirement, your options are limited.

“I should keep the maximum because my spouse will need it”

Maybe. But many spouses mainly need:

a paid-off home
stable income (survivor annuity/SBP)
a cash cushion

Sometimes a smaller policy plus good planning is the better answer.

“I don’t need any life insurance because I have TSP”

TSP is great, but it’s still your money. Life insurance is someone else’s money paid when you die. If your spouse would have to drain TSP fast to survive, some life insurance may still be smart.

If you want more on federal benefits planning, see our benefits guide.

How to decide: a simple FEGLI retirement checklist (action steps)

Step 1: Write down who would be hurt financially if you died

List:

spouse
kids
anyone you support

Then write what they’d need:

$2,500/month for bills?
mortgage payoff?
childcare?

Step 2: List your “income that would continue”

Common sources:

FERS survivor benefit (if you elect it)
Social Security survivor benefits (if eligible)
military SBP (if elected)
pensions, rental income

You can read official retirement basics at OPM.gov.

Step 3: Decide how many years you need life insurance

Most people don’t need “forever insurance.” Common time horizons:

5 years (bridge to spouse retirement)
10 years (pay down mortgage)
20 years (kids through college)

Step 4: Estimate your FEGLI retirement cost

Ask HR for help before you retire, and confirm your options with OPM resources:

Start at OPM.gov

Focus on:

Basic (75/50/no reduction)
Option B multiples
Option C multiples

If you have large Option B, that’s the place to zoom in.

Step 5: Compare to private term life (if you’re healthy)

If you’re healthy, you may find a private term policy that:

locks a level price for 10–20 years
gives more coverage per dollar than FEGLI Option B later in life

But if your health is poor, FEGLI may be the only affordable option.

Step 6: Make a “keep some, drop some” plan

You don’t have to treat FEGLI like an all-or-nothing choice.

A very common smart mix:

keep Basic with 75% reduction
reduce or cancel Option B
keep Option C only if it truly fits your family needs

Step 7: Set a calendar reminder to review in 1–2 years

Retirement changes fast:

mortgage balance drops
spouse may start Social Security
kids age out
your savings may grow

FEGLI should change with your life.

FEGLI retirement and healthcare: don’t confuse life insurance with FEHB and Medicare

Some retirees mix these up:

FEGLI = life insurance (pays when you die)
FEHB = health insurance (pays medical bills)
Medicare = health coverage at 65+

For official FEHB info, use OPM FEHB information. For Medicare, start at CMS Medicare.

They’re separate decisions, but they hit the same retirement budget. If FEGLI Option B is eating up cash you need for healthcare, that’s a red flag.

Quick “cost retirement” warning signs (when FEGLI may not be worth it)

FEGLI may be not worth keeping (or worth trimming) if:

you’re paying a lot for Option B or C and don’t truly need that coverage
you have no dependents and plenty of savings
the premium is forcing you to cut essentials (like medications, home repairs, or food)

On the other hand, FEGLI may be worth keeping if:

you can’t qualify for private insurance due to health
you still have real dependents and a clear need
you need coverage for a short “bridge” period and can afford it

If you want more federal workforce perspectives and news, these sources often cover benefits topics (not official, but useful context):

(For decisions and rules, always confirm with OPM.gov.)

Key Takeaways: FEGLI retirement—what most people should do

FEGLI is real federal life insurance, but retirement pricing can change the math fast.
Basic with 75% reduction is often the sweet spot for many retirees who want a small safety net.
Option B is the most common reason FEGLI becomes “too expensive” later. That’s where most people save money by reducing coverage.
The right answer depends on your “need window” (5 years, 10 years, 20 years), your health, and who depends on you.
Don’t guess. Estimate your retirement budget, compare options, and make a plan you can live with.

If you want help thinking through how FEGLI fits with your whole federal retirement plan, check our benefits guide and federal pay info.

FEGLI Life Insurance: Is It Worth Keeping Into Retirement?