FEGLI vs. Private Life Insurance: Which Is Better?
FEGLI premiums skyrocket after 65. Here's a comparison of Federal Employees Group Life Insurance vs. private alternatives, and when to make the switch.
4 min read · By John G. Ziesing, FRC
How FEGLI Works
Federal Employees Group Life Insurance provides Basic coverage (your salary rounded to the next $1,000, plus $2,000) and three Optional coverages. It's convenient and requires no medical exam — but the cost changes dramatically as you age.
The FEGLI Cost Problem After 65
FEGLI Option B premiums increase every 5 years after 45 and become extremely expensive after 65. A federal employee who paid $50/month for Option B coverage at 55 might pay $300-$500/month at 70 for the same coverage. Many retirees can't afford these premiums and end up dropping coverage entirely.
Private Alternatives
A private life insurance policy (term or IUL) purchased in your 50s can lock in premiums that never increase. An IUL also builds tax-free cash value, making it a dual-purpose tool. For many federal employees, switching from FEGLI to a private policy before retirement saves tens of thousands of dollars over their lifetime.
When to Make the Switch
The best time to evaluate your FEGLI coverage is 5-10 years before retirement, while you're still healthy enough to qualify for private insurance at favorable rates. We help federal employees compare FEGLI costs against private alternatives and make the switch when it saves money.
Related Articles
Have Questions About This Topic?
Schedule a free 20-minute consultation and get personalized answers from our team.