Understanding Federal Employee Life Insurance Options After Retirement

Continuing Coverage with FEGLI After Retirement

Federal employees who retire can keep their Federal Employees' Group Life Insurance (FEGLI) by converting it to an individual policy, usually within 60 days of leaving service. The conversion preserves the same coverage amount and basic term structure, but premiums are based on the retiree's age at conversion and are paid directly to the agency or insurance carrier.

Conversion Options and Eligibility

Retirees may convert:

• Basic (Group) Coverage: Up to $10,000 automatically, with the option to increase to $50,000, $100,000, or $250,000 depending on eligibility.
• Optional Coverage: Any amount previously elected, up to $1,000,000, provided the retiree was eligible for the optional tier at the time of retirement.

Eligibility to convert requires that the employee was covered under FEFEGLI at the time of retirement and that the conversion request is filed within the agency‑specified window, typically 60 days but sometimes extended by the employing agency.

Cost Factors and Premium Calculations

Premiums for converted FEGLI policies are calculated using the retiree's current age, the amount of coverage, and the underwriting class (standard, preferred, or sub‑standard). Because the policy becomes an individual contract, rates are higher than while the employee was active, reflecting the increased mortality risk with age.

Typical Premium Structure

Premiums consist of a base rate for the basic tier plus a per‑$1,000 charge for any optional coverage. For example, a 65‑year‑old retiree converting $100,000 of basic coverage might pay a base premium of about $150 annually, plus $30 for each additional $1,000 of optional coverage.

Alternatives to FEGLI Conversion

Retirees who find FEGLI premiums prohibitive can explore:

• Purchasing a private term life policy with a fixed rate for a set term (10, 20, or 30 years).
• Buying a permanent whole‑life or universal life policy, which builds cash value but carries higher premiums.
• Utilizing any existing employer‑provided retiree life benefits, such as agency‑specific group policies.

Each alternative should be compared for coverage amount, cost, medical underwriting requirements, and the ability to convert or renew later.

Impact on Survivors' Benefits

Maintaining life insurance after retirement can protect a spouse's survivor benefits, such as the Federal Employees' Retirement System (FERS) survivor annuity. Without coverage, the surviving spouse may receive only a reduced annuity, whereas a life‑insurance payout can provide additional financial security.

Key Dates and Action Checklist

By following this checklist, retirees can avoid lapses in coverage and make an informed decision that aligns with their financial goals.