Retirees' Guide To Canceling Life Insurance Post-Fers

Federal retirees can cancel their life insurance at any time, but they won't be able to reinstate it later. This includes Option C family coverage, even if they remarry after retirement. Before cancelling, retirees should consider their options, as they may want to reduce their coverage instead, for example, if their children have finished college or they have paid off their home. They may also want to take out insurance through another source that better fits their needs, such as a policy that builds cash value, which is not available through the Federal Employees Group Life Insurance (FEGLI) program.

Cancelling FERS life insurance after retirement

Federal employees are eligible to continue their Federal Employees Group Life Insurance (FEGLI) coverage into retirement if they meet certain requirements. These include being entitled to an immediate annuity, which means being able to start receiving retirement benefits within 31 days of separation from service, and having been insured for the five years immediately preceding retirement, or since the first opportunity to enrol.

However, federal retirees can choose to cancel their FEGLI coverage at any time, even after retirement. There are several reasons why a retiree might want to cancel their FEGLI coverage, such as no longer needing the coverage or finding a better insurance option that suits their needs. For example, FEGLI does not offer policies that build cash value, so a retiree might opt for a policy that does.

If you decide to cancel your Basic life insurance, you will also be cancelling all your Optional insurance. Cancelling your FEGLI coverage is a one-way decision, and you will not be able to reinstate it later. Therefore, it is important to carefully consider your options and make an informed decision.

To cancel your FEGLI coverage, you need to submit a request to the Office of Personnel Management (OPM). The cancellation will be effective from the first of the month after the month in which OPM receives your request. It is important to note that you will not receive a refund for any premiums paid up to the end of the month in which your request is received.

Reasons for cancellation

There are several reasons why a retiree may choose to cancel their Federal Employees Group Life Insurance (FEGLI) coverage. Here are some common reasons for cancellation:

Changing Needs and Circumstances: Retirees may find that their insurance needs change over time. For example, if their children have completed their education or if they have paid off their mortgage, they may feel they no longer require the same level of financial protection. In such cases, cancelling or reducing FEGLI coverage can be a way to save money on premiums.

Alternative Insurance Options: Some retirees may explore alternative insurance options that better suit their needs. For instance, they may opt for a policy that builds cash value, which is not available through FEGLI. By switching to a different insurance provider or policy, retirees can customize their coverage to align with their evolving priorities and goals.

Cost-Saving Measures: The cost of FEGLI coverage increases as retirees move up through five-year age brackets, making it more expensive over time. If retirees are facing financial constraints or are looking to reduce their overall expenses, cancelling or reducing their FEGLI coverage can be a way to lower their monthly costs.

Simplifying Financial Planning: Retirees may also choose to cancel their FEGLI coverage as part of simplifying their financial planning. By consolidating their insurance policies or opting for alternative coverage, they can streamline their financial obligations and reduce the complexity of managing multiple plans.

Switching to Medicare: With Medicare becoming available at age 65, federal employees have the option to transition to this program or explore other private healthcare options. Retirees may find that Medicare, with its various parts (A, B, C, and D), offers more flexibility and comprehensive coverage for their healthcare needs during retirement.

It is important to note that while retirees have the flexibility to cancel their FEGLI coverage at any time, it is a one-way decision. Reinstating FEGLI coverage after cancellation is not permitted, even in cases of changed circumstances or new needs. Therefore, retirees must carefully consider their options and make informed decisions regarding their insurance coverage during retirement.

Cancelling Basic life insurance

To cancel your Basic life insurance, you need to submit a request to the Office of Personnel Management (OPM). The cancellation will take effect on the first day of the month after OPM receives your request. It is important to note that if you cancel your Basic life insurance, you will also be cancelling all your Optional insurance coverage. This includes any additional coverage you may have elected, such as the 50% reduction or no reduction schedule upon retirement.

In addition, it is important to be aware that once you cancel your FEGLI coverage in retirement, you will not be able to reinstate it later. Therefore, it is crucial to carefully consider your decision and ensure that you no longer require the coverage before proceeding with the cancellation.

Retirees may consider cancelling their Basic life insurance for various reasons. One reason could be that the potential need that the insurance was intended to cover no longer exists. For example, if your children have completed their education or you have paid off your mortgage, you may feel that you no longer need the same level of coverage. Additionally, you may find that another insurance option better suits your needs, such as a policy that offers cash value, which is not available through FEGLI.

Cancelling Optional insurance

As a FERS retiree, you may want to cancel your optional insurance coverage for a variety of reasons. For example, you may no longer need the coverage because your children have finished college or you've paid off your home. Alternatively, you may find a different insurance policy that better suits your needs, such as one that builds cash value, which is not available through the Federal Employees Group Life Insurance (FEGLI) program.

If you decide to cancel your Basic life insurance, you will automatically cancel all your Optional insurance as well. You can also choose to cancel just the additional coverage, such as the 50% reduction or no reduction schedule, at any time. Additionally, you have the option to reduce or cancel the amount of your Option B insurance or any other Optional life insurance coverages you may have.

It's important to note that if you cancel your FEGLI coverage in retirement, you will not be able to reinstate it later. This includes Option C family coverage, even if you remarry after retirement. Therefore, it's essential to carefully consider your needs and explore all your options before making any changes to your insurance coverage.

To cancel your Optional insurance, you need to submit a request to the Office of Personnel Management (OPM). The cancellation will be effective the first of the month after the month in which OPM receives your request. Keep in mind that you will not receive a refund for any premiums paid through the end of the month in which your request is submitted.

Retroactive cancellation

Firstly, it's important to understand that Federal Employees Group Life Insurance (FEGLI) is the program that provides life insurance coverage for federal employees, including those under the Federal Employees Retirement System (FERS). FEGLI offers Basic life insurance coverage, as well as Optional insurance coverage, such as Option C family coverage.

Now, regarding retroactive cancellation, if you have Option C coverage and you no longer have any eligible family members, you can cancel this coverage retroactively. Specifically, the cancellation can be effective from the first of the month after the month in which you lost your eligibility. For example, if you lost eligibility in June, you can cancel Option C coverage effective from the 1st of July. This means you won't be charged premiums for the period when you no longer had eligible family members.

It's important to note that cancelling your Basic life insurance will also result in the cancellation of all your Optional insurance coverage. So, if you have other optional coverages besides Option C, they will all be cancelled if you choose to cancel your Basic coverage.

Additionally, it's worth mentioning that while you can cancel your FEGLI coverage at any time, including after retirement, it is a permanent decision. You won't be able to reinstate the coverage later. Therefore, it's essential to carefully consider your needs and explore alternative insurance options before making a cancellation request.

To initiate a cancellation, you need to submit a request to the Office of Personnel Management (OPM). The cancellation will typically take effect from the first of the month after OPM receives your request.

Frequently asked questions