What happens to life insurance when you retire?
When federal employees retire, the Federal Employees’ Group Life Insurance (FEGLI) program undergoes several important considerations. FEGLI provides life insurance coverage to eligible federal employees, and understanding the options available at retirement is crucial.
At the time of federal retirement, employees can choose to continue their FEGLI coverage into retirement or opt for a different arrangement. The most common choice is to maintain Basic Life Insurance coverage, but individuals may also elect to keep any optional coverage they have, such as Option A (Standard Optional Insurance) and Option B (Additional Optional Insurance). However, Option C (Family Optional Insurance) is not available in retirement.
It’s important to note that FEGLI premiums increase significantly after retirement, and coverage may be subject to certain reductions. Federal retirees can choose to maintain coverage at a lower level or decline it altogether. The decision should be based on individual circumstances, financial considerations, and the need for life insurance coverage in retirement.
Additionally, federal retirees have the option to convert their FEGLI coverage to an individual policy with a private life insurance company within 31 days of retirement. This can be a viable option for those seeking to maintain life insurance coverage without relying on the FEGLI program.
Federal employees should carefully review their life insurance needs and consult with a benefits counselor to make informed decisions about their FEGLI coverage at the time of retirement. It’s essential to consider factors such as financial obligations, family circumstances, and overall estate planning goals when determining the most suitable path for life insurance coverage during retirement.