As a federal employee approaching retirement, you’ve likely dedicated decades of service to your country—and now, you’re looking toward a secure and well-planned retirement. One of the most common questions we hear at United Benefits is, “Do federal employees really need life insurance after retirement?” It’s an important question that deserves thoughtful consideration, especially when you’re balancing pensions, health coverage, and other retirement benefits.
At United Benefits, we specialize in helping federal employees navigate post-retirement insurance decisions. Whether you’re exploring coverage options through the Federal Employees’ Group Life Insurance (FEGLI) program or comparing private life insurance policies, understanding how these options impact your financial security and legacy is essential.
Understanding FEGLI and Its Role After Retirement
The Federal Employees’ Group Life Insurance (FEGLI) program is a cornerstone benefit offered to federal employees. It provides term life coverage that automatically reduces in cost and benefit amount upon retirement. While FEGLI is a valuable option during your working years, retirees often discover that premiums can rise significantly or that coverage levels decline over time as they age.
Many retirees assume their life insurance needs decrease after leaving government service. However, life insurance serves several purposes—protecting loved ones from financial loss, covering final expenses, paying off debts, and leaving a legacy for future generations. These motivations often remain well into retirement.
The Benefits of Maintaining or Replacing Life Insurance Post-Retirement
Life insurance is more than just a financial safety net—it’s also a strategic financial planning tool. Here are some key benefits of keeping or adjusting your coverage after retirement:
- Protect Your Family’s Financial Stability: Even after retirement, your family may rely on your pension or income from other investments. Life insurance can replace that income, ensuring your loved ones remain financially protected.
- Cover End-of-Life Expenses: According to the National Funeral Directors Association, the average cost of a funeral with burial exceeds $7,800. Life insurance can help ease this financial burden on your family.
- Settle Debts: Many retirees still carry mortgages, medical bills, or other debts. A well-structured life insurance policy can help cover these obligations and protect your estate.
- Tax Advantages: Death benefits from life insurance are generally not subject to federal income tax, allowing your beneficiaries to receive the full policy amount.
When FEGLI May No Longer Be Enough
FEGLI Option B and Option C are common add-ons for federal employees, but the premiums often rise every five years after age 50. Many retirees find themselves paying more for less coverage as they age. For example, premiums can increase by up to 150% from one five-year bracket to the next. This cost escalation often makes private alternatives more appealing for retirees seeking stable, long-term protection.
That’s where our team at United Benefits can help. We work with federal employees and retirees to evaluate whether continuing FEGLI coverage or transitioning to a personally owned policy is the better financial move. Often, retirees discover that personal life insurance plans offer level premiums, permanent options, cash value accumulation, and flexible benefits that better fit their stage of life.
Evaluating Your Post-Retirement Needs
Your need for life insurance after retirement depends on several key factors:
- Dependents: Do you have a spouse or family member who relies on your pension or retirement income?
- Debt and Liabilities: Are you still paying off a mortgage or personal loans?
- Legacy Goals: Do you want to provide an inheritance, fund a grandchild’s education, or donate to a charitable organization?
- Health and Insurability: Your current health status influences both availability and pricing for private life insurance plans.
Life insurance is about ensuring that your loved ones have options, freedom, and financial certainty. Even if your needs have diminished, converting part of your FEGLI coverage or acquiring a smaller personal policy may still be a wise move.
Private Alternatives to FEGLI
Private life insurance can often provide more control and transparency for retirees. Two popular forms of coverage include:
- Term Life Insurance: Offers cost-effective protection for a fixed period—ideal if you still have specific financial obligations, such as a mortgage or dependent spouse.
- Permanent Life Insurance: Builds cash value and provides lifetime coverage, ensuring your loved ones receive lasting security no matter when you pass away.
Unlike FEGLI, private insurers also allow customization, such as adding riders for long-term care, chronic illness, or accelerated death benefits. These options can make a significant difference in your retirement planning.
Why Federal Retirees Choose United Benefits
At United Benefits, we’ve spent decades supporting active and retired federal employees with comprehensive benefits counseling. Our experts understand every detail of FEGLI coverage and can guide you through the process of comparing, converting, or supplementing your federal insurance plans.
We take pride in offering a personalized approach. After a complimentary consultation, we’ll evaluate your existing coverage, budget, and estate goals to design an insurance strategy that balances protection, flexibility, and affordability.
Common Misconceptions About Life Insurance After Retirement
Many retirees fall into one of two camps—those who drop all their coverage because they think they no longer need it and those who keep expensive policies without evaluating them. Both paths can cost you and your family in the long run. Here are a few common myths:
- “I don’t need life insurance once I retire.” Even after retirement, life insurance can protect your surviving spouse’s financial independence, especially if you depend on pension income.
- “My federal coverage will always be enough.” FEGLI coverage can shrink over time, and premiums increase with every age bracket past 50.
- “Private life insurance is too expensive.” Many private policies are now competitively priced, and with stable, level premiums, they can be more predictable than rising FEGLI costs.
Taking the Next Step Toward Financial Security
Making informed insurance decisions after retirement is one of the best ways to protect your family’s future. With the right guidance, federal retirees can find the balance between sufficient coverage and long-term affordability.
If you’d like to explore how private life insurance compares to your federal options or receive a personalized retirement benefits review, contact the United Benefits team today. Our experienced consultants will provide you with clear comparisons and solutions that align with your financial planning goals.
You can reach us today at 866-558-2121 or visit us at 3295 County Road 47, Florence, AL 35630. To learn more about our services, visit our Life Insurance page for helpful resources, calculators, and guidance designed specifically for federal retirees.
At United Benefits, we believe peace of mind is the greatest retirement benefit of all. Let us help you make the most informed choice for your life, your family, and your future.