FEGLI in Retirement: The Age-Band Price Curve, the Reduction Elections, and the Decision Most Feds Postpone Too Long

Data current as of 2026 · Sources: OPM

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FEGLI, defined: The Federal Employees' Group Life Insurance program has four parts — Basic (about one year's salary, government-subsidized, flat-rated), Option A (a flat $10,000), Option B (1–5 multiples of salary, fully employee-paid, age-banded), and Option C (family coverage, age-banded). Basic's price never changes with age; Options A, B, and C reprice into higher age bands every five years.

Who This Article Is For

• Feds in their 50s who've noticed the Option B line on the LES creeping up and want to know where it's headed
• Employees within five years of retirement — the window in which the 5-year rule starts binding
• Retiring employees staring at the SF-2818 reduction elections without a framework
• Anyone carrying 5× Option B "because I signed up in my 30s and never looked again"
• Feds comparing FEGLI against private term insurance while they still have the insurability to choose

1. The Four Parts, and Which One Is the Problem

Reference table of OPM-published FEGLI rates. Confirm your current coverage and premiums against your own SF-2817/2818 elections or with your agency HR office.

Basic is the good deal and stays one: a 60-year-old pays the same $0.16 per $1,000 as a 25-year-old, with the government covering a third of the cost. On a $100,000 salary that's $102,000 of coverage for $16.32 biweekly — about $424/year.

Option B is where careers quietly accumulate a problem. It's priced per $1,000 with no subsidy, and the rate re-bands every five years.

2. The Option B Price Curve

The rates below are OPM's current published Option B rates (per $1,000, biweekly), applied to $500,000 of coverage — a 5× multiple on a $100,000 salary. This is the exact table our FEGLI Calculator uses.

Read the curve, not any single row: the rate roughly doubles every five years from 45 onward. Nobody feels the jump from $260 to $390. Plenty of people feel $3,770. And the retiree who keeps unreduced Option B into their 80s is paying a compact-car's worth of premium annually for coverage they elected when it cost less than a streaming subscription.

None of this makes Option B a scam — it's roughly what group term insurance costs at those ages, with no medical underwriting. The problem isn't the pricing; it's inertia. The election renews silently while its price quadruples per decade.

3. Carrying FEGLI Into Retirement: The 5-Year Rule

Like FEHB, FEGLI can only continue into retirement if you retire on an immediate annuity and have been enrolled for the 5 years immediately before retirement (or since your earliest opportunity). Two consequences:

• You can't add coverage on the way out. Increasing Option B at 56 to "have more in retirement" fails the 5-year test for the increase at a 59 retirement. The coverage you can keep is the coverage you've held.
• Deferred retirees lose FEGLI entirely — the same immediate-annuity requirement that costs them FEHB. Postponed MRA+10 retirees can reinstate at annuity commencement.

At retirement, premiums switch from biweekly payroll deduction to monthly annuity deduction, and the coverage amounts are frozen at your final salary — future retiree COLAs don't grow the coverage.

4. The Retirement Elections (Form SF-2818)

At retirement you make separate elections for each part you're keeping. In plain terms:

Basic — three choices:

• 75% Reduction — the default and, for most, the sensible one. You pay premiums only until 65; then coverage reduces 2% per month until it stabilizes at 25% of the original amount — free for the rest of your life. A $102,000 Basic becomes a permanent, no-cost $25,500 final-expense benefit.
• 50% Reduction — coverage shrinks to half instead of a quarter; you pay an additional premium for life.
• No Reduction — full coverage forever, at the highest premium, for life.

Option B — per multiple: either Full Reduction (premiums stop at 65; coverage then melts 2%/month to zero — essentially free coverage that expires around 69) or No Reduction (coverage stays, and you keep paying the age-banded rates in the table above, band after band).

Option A reduces automatically to 25% ($2,500) after 65, free.

Illustrative framing only. The right election depends on what the insurance is for. A pension survivor election, term life, and FEGLI solve different problems at very different prices — this is a needs question before it's a rates question. Not insurance advice.

5. A Framework for the Option B Decision

The honest question at retirement isn't "keep or drop" — it's "what does anyone still need life insurance to do?" Work through it in order:

1. Income replacement? In retirement, your survivor's income is protected by the survivor benefit election (and its FEHB guarantee), not by term insurance. If the survivor annuity plus Social Security covers your spouse's needs, Option B isn't doing that job anymore.
2. A specific liability? A mortgage with 8 years left, a dependent's support — these justify coverage for that window. Priced against the table above, a 60-something often finds level-premium private term for a fixed window cheaper than riding FEGLI's bands, if insurability allows.
3. Final expenses? That's what the free post-65 Basic 75%-reduction remnant is for.
4. Nothing specific? Then Option B at $0.46-and-climbing per $1,000 is an expensive habit. Multiples can be reduced at any time — dropping from 5× to 2× keeps some coverage while cutting the premium 60%.

The pattern that fits many retirements: keep Basic with 75% reduction, let Option A ride, take Full Reduction on Option B (free coverage to ~69, then gone), and cover any true remaining need with right-sized term insurance purchased while still insurable.

Frequently Asked Questions

Can I keep FEGLI in retirement? Yes, if you retire on an immediate annuity and were enrolled in the coverage for the 5 years immediately before retirement (or since your first opportunity). Premiums come out of your annuity.

How much does Option B cost as I age? Per $1,000 biweekly: $0.06 at 45–49, $0.14 at 50–54, $0.29 at 55–59, $0.46 at 60–64, $0.72 at 65–69, $1.11 at 70–74, $1.68 at 75–79, $2.30 at 80+. The rate roughly doubles every five years past 45.

What is the 75% reduction for FEGLI Basic? The retirement election under which you pay Basic premiums only until 65; coverage then reduces 2%/month until 25% remains — which you keep free for life. It's the default election and the cheapest way to keep permanent coverage.

What happens to Option B if I elect Full Reduction? Premiums stop at 65, and coverage declines 2% per month until it reaches zero (about 50 months later). You get free, temporary coverage through your late 60s.

Does my FEGLI coverage grow with COLAs in retirement? No. Coverage amounts freeze at your salary as of retirement; annuity COLAs don't increase them.

Can I increase FEGLI before retiring to carry more coverage? Effectively no — increases generally require a qualifying life event or open season, and any increase must itself satisfy the 5-year rule before retirement to carry over.

Can I reduce or cancel Option B at any time? Yes. You can reduce multiples or cancel at any time, in service or in retirement. You just can't easily get it back.

Is FEGLI Option B a bad deal? Not for its structure — it's group term with no underwriting at roughly market rates. It becomes a bad fit when it's carried by default into age bands where the need has expired but the premium hasn't.

Do deferred retirees keep FEGLI? No. Like FEHB, FEGLI requires an immediate annuity to continue. Postponed MRA+10 retirees can reinstate coverage when their annuity begins.

The Bottom Line

FEGLI is two very different products wearing one acronym. Basic is subsidized, flat-priced, and — with the 75% reduction — turns into free permanent coverage after 65; keeping it is rarely a mistake. Option B is honest but unforgiving group term whose price doubles every five years while your attention is elsewhere. The retirement elections are where inertia gets expensive: decide what any remaining coverage is actually for, size it deliberately, and let the age-band table — not habit — set what you carry into your 70s.

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