When you retire from federal service, there are a lot of decisions to make. One of the big ones is whether or not to keep your Federal Employees Group Life Insurance (FEGLI) coverage after you retire. You’ve worked hard for years, so understanding how FEGLI benefits after retirement work is important for making the right choice for you and your loved ones. In this blog, we’ll look at the pros and cons of keeping FEGLI after federal retirement to help you decide what’s best for your situation.

Pros of Keeping FEGLI After Retirement

Affordable Coverage

One of the biggest advantages of keeping FEGLI after retirement is its affordability. Many federal retirees find that keeping their FEGLI coverage is cheaper compared to other life insurance options. If you’re already used to paying for FEGLI during your working years, the transition to retirement coverage might feel smooth and easy. Additionally, because FEGLI is tied to your service with the federal government, it often comes with lower premiums for retirees than what you would pay for similar private insurance policies.

Coverage Without Medical Exam

Another perk of keeping FEGLI after retirement is that you don’t need a medical exam to continue your coverage. This is a huge benefit because many private insurance companies require you to pass a health check before they will approve your coverage. With FEGLI, you can keep your life insurance without worrying about health issues that might prevent you from qualifying for a private policy.

Flexibility

FEGLI gives you the ability to choose how much life insurance you want to keep after retirement. You can choose to reduce your coverage or even cancel some of your benefits. This flexibility can help you adjust your coverage based on your needs and financial situation after you retire. You can also keep just the basic coverage or decide to keep additional options like the Family Optional Insurance.

Cons of Keeping FEGLI After Retirement

Costs Can Increase Over Time

While FEGLI is affordable at first, it can become more expensive as you get older. Premiums for FEGLI after retirement increase as you age, and this can lead to higher costs later in life. The price hike may not be something you expect if you’re only thinking about keeping your coverage for a few years after retirement. It’s important to plan for these potential increases and decide if you’re comfortable with the rising costs over time.

Limited Coverage Options

One drawback of FEGLI is that it might not provide enough coverage for some retirees. The amount of life insurance you have with FEGLI may not be enough to meet all of your needs, especially if you have a large family or if your living expenses increase after retirement. You may need to look at additional insurance policies to fill the gaps left by FEGLI.

Lack of Flexibility in Choosing Providers

Unlike private life insurance, FEGLI doesn’t give you a wide range of options in terms of providers. If you’re someone who wants to shop around for different life insurance policies or find a plan with better terms, FEGLI might not be the best choice for you. The coverage is tied to the federal government, so you can’t change providers once you’re enrolled.

Final Verdict: What Should You Do?

Deciding whether to keep FEGLI after retirement depends on your individual needs and preferences. For some retirees, it makes sense to keep the coverage, while for others, it might be better to explore other options. Consider factors like your current health, how much coverage you need, and what your budget looks like in retirement.

To get a clearer idea of how your retirement benefits might work with FEGLI, using a federal pension plan calculator can help you estimate your future pension and see how FEGLI fits into your overall retirement plan. These tools can help you make informed decisions based on your unique situation.

In the end, it’s all about finding the right balance between affordable coverage and the financial protection you need. With careful planning, you can ensure that your FEGLI benefits after retirement serve you well for years to come.