Alyssa Lane
Federal employees in the US who are enrolled in the Federal Employees Group Life Insurance (FEGLI) program are often curious about whether their life insurance coverage will continue after retirement. The answer is yes, but there are certain requirements that must be met to continue FEGLI coverage into retirement. Firstly, the individual must have been enrolled in FEGLI for the five years preceding their retirement or from their earliest opportunity to enroll. Secondly, they must be receiving an immediate annuity, which means their retirement benefits start within 31 days of separation from service. Additionally, they must not have converted their FEGLI coverage to an individual policy. If these criteria are met, federal employees can continue their Basic insurance and optional coverages (Option A, B, and C) into retirement, although the costs and benefits may change. It is important to note that accidental death and dismemberment coverage under FEGLI typically ends upon retirement. Overall, while FEGLI life insurance can provide valuable coverage for federal employees during their working years and beyond, it is essential to carefully review the requirements and options to ensure continued coverage in retirement.
| Characteristics | Values |
|---|---|
| Eligibility | Retiring federal employees are eligible to continue FEGLI life insurance into retirement if they meet the following requirements: 1. The employee is eligible to retire and will receive an immediate annuity 2. The employee has been insured under FEGLI for at least the five years immediately preceding retirement, or since their first opportunity to enroll 3. The employee was enrolled in FEGLI on the date of retirement 4. The employee did not convert the FEGLI insurance to an individual policy |
| Coverage after retirement | The amount of Basic coverage carried into retirement is based on the employee's salary on the day they retire. There are three options for the percentage of Basic coverage that can be continued into retirement: 1. 75% reduction: coverage reduces by 2% per month until it reaches 25% of its original value, with no premiums paid after age 65 2. 50% reduction: coverage reduces by 1% per month until it reaches 50% of its original value, with premiums paid until age 65 3. No reduction: coverage remains the same, with premiums paid throughout retirement |
| Optional coverages | Option A (Standard): $10,000 death benefit that reduces by 2% per month starting at age 65 or retirement if later, with no premiums required after age 65 Option B (Additional): the number of multiples to carry into retirement can be chosen, with the option of Full Reduction or No Reduction Option C (Family): the number of multiples to carry into retirement can be chosen, with the option of Full Reduction or No Reduction |
What You'll Learn
Basic insurance after retirement
Basic insurance can be continued into retirement under the Federal Employees Group Life Insurance (FEGLI) program, but certain conditions must be met. Firstly, you must be entitled to an immediate annuity, meaning you can begin receiving retirement benefits within 31 days of your separation. For those under the Federal Employees Retirement System (FERS), this means separating at the minimum retirement age with at least 10 years of creditable service. Secondly, you must have been insured for the five years immediately preceding your retirement or since your first opportunity to enroll. Lastly, you must not have converted your life insurance coverage to an individual policy. If you have already converted the coverage, you must cancel the converted policy to continue Basic insurance.
The amount of Basic coverage you carry into retirement is based on your salary on the day you retire, rounded up to the next $1000, plus $2000. When you retire, you will need to make your choices on form SF 2818, Continuation of Life Insurance Coverage. The Office of Personnel Management (OPM) will deduct FEGLI premiums from your retirement benefit each month.
There are three options for FEGLI coverage in retirement:
- 75% reduction: You maintain the Basic coverage from your last day of employment, but after turning 65, the coverage reduces by 2% monthly until it reaches 25% of its original value. You stop paying premiums at $0.3467 per $1000 of coverage per month when the reduction begins.
- 50% reduction: You keep the Basic coverage from your final day of employment, but post-65, coverage is reduced by 1% per month until it reaches 50% of the original value. You pay Basic premiums of $0.3467 and additional premiums of $0.75 per $1000 of coverage until the reduction, after which you must continue paying the additional premiums. You can cancel this option and revert to the 75% option at any time.
- No reduction: You maintain the Basic coverage from your final day of employment. You will pay Basic premiums of $0.3467 and additional premiums of $2.25 per $1000 of coverage per month if you retired before the age of 65. After 65, you will pay $2.25 to maintain the no-reduction coverage. This option can be cancelled at any time, and you can revert to the 75% option.
It is important to note that accidental death and dismemberment coverage under Basic insurance ends upon retirement.
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Option A-Standard insurance after retirement
Option A-Standard insurance is a fixed $10,000 amount when you retire. It reduces by 2% a month, $200, starting at age 65 until it reaches $2,500. There is no premium cost for Option A starting when it reduces and continuing when it reaches $2,500. This is automatic, as there is no reduction election to make at the time of retirement for Option A.
The cost of Option A varies by age. For example, for those aged 50-54, the premium is $2.17 per month, while for those aged 60-64, it is $13 per month. For those aged 65 and over, there is no charge.
If you continue Option A coverage, the $10,000 death benefit will decline by 2% per month until it reaches $2,500 beginning at retirement or 65, if later. No premiums are required after you turn 65, once retired.
While Basic and Option A insurance provide accidental death and dismemberment coverage while you are employed by the government, that coverage stops when you retire.
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Option B-Additional insurance after retirement
Option B-Additional insurance is a multiple of your final annual basic pay rate, which is rounded up to the nearest $1,000. You can choose coverage of one, two, three, four, or five times your annual basic pay. This option is available to you if you were enrolled in FEGLI for the five years before your retirement or for the entire period(s) during which the coverages were available to you.
The cost of Option B-Additional insurance depends on your age and the number of multiples you choose. The older you are, the more expensive it gets. For example, if you retire at 50, the rate is $0.217 per $1,000 per month, whereas if you retire at 80 or older, the rate is $6.24 per $1,000 per month.
If you elect the full reduction option, your multiple coverage will stay in force until you turn 65, at which point the premiums stop and your coverage reduces by 2% per month for 50 months, after which coverage ends.
If you elect the no reduction option, your coverage will not be reduced, but you will continue to pay the same premiums as active employees, which increase with your age.
You can choose to have some multiples with full reduction and others with no reduction. You will have a second opportunity to elect how the multiples reduce at age 65 or when you retire, if later.
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Option C-Family insurance after retirement
Option C-Family insurance is a part of the Federal Employees Group Life Insurance (FEGLI) program. It provides life insurance coverage for an employee's spouse and unmarried dependent children (excluding foster children). An employee can elect up to five multiples of coverage, with each multiple providing $5,000 for a spouse and $2,500 for each eligible child.
Option C-Family insurance can be continued into retirement. The premiums are based on the retiree's age group and must be paid in full by the retiree. Here are the premium costs per multiple for different age groups:
- 50-54 years old: $1.80 per multiple per month
- 55-59 years old: $2.88 per multiple per month
- 60-64 years old: $5.27 per multiple per month
- 65-69 years old: $6.13 per multiple per month
- 70-74 years old: $8.30 per multiple per month
- 75-79 years old: $12.48 per multiple per month
- 80 years old and above: $16.90 per multiple per month
At age 65, premiums stop, and the value of the coverage will decline by 2% per month for 50 months, after which coverage will end unless the retiree chooses to keep the full amount of insurance and continue paying premiums.
It is important to note that Option C-Family insurance benefits are paid to the employee or annuitant, and they cannot designate a beneficiary. Additionally, Option C coverage for children ceases when the child reaches the age of 22.
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Cancelling FEGLI insurance after retirement
To carry your Federal Employees' Group Life Insurance (FEGLI) coverage into retirement, you must have been enrolled in FEGLI for the five years before your retirement, or from your earliest opportunity to enrol. If you don’t meet that requirement, you cannot continue coverage.
If you are not eligible to continue your FEGLI coverage into retirement, or you simply don't want to, you must either drop the coverage or convert it to an individual policy. The policy will stay in force for 31 days following retirement at no cost to you.
If you wish to convert to an individual policy, you must apply for the new policy and pay the first premium to the insurance company within the 31-day temporary extension of coverage. You must pay the full amount of the premiums yourself. The actual amount will be based on the dollar amount of the insurance you decide to convert, your age and your risk category.
If you decide to convert some or all of your current coverage to an individual policy, you will not be required to take a medical exam to qualify.
If you cancel your Basic insurance, you are also cancelling all your Optional insurance. If you elected the 50 per cent reduction or no reduction schedule for your Basic life insurance, you may cancel this additional coverage at any time. You may also reduce (or cancel) the amount of your Option B insurance, or cancel any or all other Optional life insurance coverages.
To cancel any FEGLI coverage, you must write a letter to: Office of Personnel Management, Retirement Operations Center, P.O. Box 45, Boyers, Pennsylvania 16017-0045.
Any cancellation or reduction of life insurance must be in writing and have an original signature by the insured retiree. Be sure to include your retirement claim number or Social Security number and specify what action you want to be taken. You can’t increase your coverage after retirement, or reinstate any coverage you cancel.
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Frequently asked questions
To continue Federal Employees Group Life Insurance (FEGLI) coverage into retirement, you must have been enrolled in FEGLI for the five years before your retirement, or from your earliest opportunity to enroll. If you don’t meet that requirement, you cannot continue coverage.
There are three options for the Basic Insurance Amount (BIA): 75 percent reduction, 50 percent reduction, and No Reduction.
On the day of retirement, the retiring employee is insured with the BIA. If the employee retires before age 65, they will pay the same FEGLI premium as they were paying as an employee until they turn 65. Upon reaching 65, the BIA reduces by 2% per month until it reaches 25% of the original amount. Starting from the month the reduction begins, the annuitant pays $0 in premiums.
With the 50 percent reduction option, the retiring employee’s BIA on the day of retirement is reduced by 1% of the original BIA per month starting the month after they turn 65, until it reaches 50% of the BIA on the day of retirement. This will take 50 months, or 4 years and 2 months. The cost is $1.035 per $1,000 of coverage per month until age 65, and $0.71 per $1,000 of coverage per month starting the month after the annuitant turns 65.
