FEGLI Option A Retirement: The $10,000 Benefit That Becomes Free After 65

The Simplest FEGLI Decision — and the One People Overthink

Option A is FEGLI's most straightforward coverage: a flat $10,000 death benefit during your career, modest age-banded premiums until 65, then a $2,500 floor at zero cost for life. There's no reduction election, no multiple-splitting, and no premium escalation past 65. You either keep it or cancel it, and cancellation is permanent.

Most federal retirees should keep Option A. The math is almost impossible to argue against.

How Option A Works Through Retirement

During your career, Option A costs a flat monthly premium based on your age band:

Starting the second month after you turn 65 (or the second month after retirement, if later), Option A reduces by 2% per month — $200 — until it reaches a $2,500 floor. That takes about 37.5 months. After the reduction completes, you have $2,500 of permanent life insurance that costs you nothing.

There's no election to make on SF 2818 for Option A's reduction — it happens automatically. Your only retirement choice is Item 9: keep it or cancel it.

The Cost of Keeping Option A

If you retire at 62, you'll pay $13.00/month from age 62 to 65 (36 months), then nothing. Total cost from retirement to free coverage: $468.

If you retire at 57, you'll pay $3.90/month from 57 to 60 (36 months) plus $13.00/month from 60 to 65 (60 months). Total: $140.40 + $780.00 = $920.40.

For either scenario, under $1,000 in total premiums buys $2,500 of permanent death benefit coverage with no medical underwriting. No private insurer offers anything comparable at that price point.

The Jump from 55–59 to 60–64

The one thing that looks alarming in the Option A rate table is the premium spike from $3.90 to $13.00 at age 60 — a 233% increase. In absolute terms, though, $13.00/month is still less than a moderately priced streaming subscription. The spike matters psychologically but not financially.

Compare this to Option B, where the same age-band crossing takes premiums from $0.390 to $0.867 per $1,000 — and on $300,000 of coverage, that's a jump from $117 to $260/month. Option A's premium shock is proportionally similar but dollar-for-dollar trivial.

Why Cancellation Is Almost Never Worth It

Cancelling Option A saves you $13/month between age 60 and 65, then nothing (because it's already free). Over 60 months at $13, that's $780 saved — in exchange for permanently giving up $2,500 of free lifetime coverage.

The only scenario where cancellation makes mathematical sense is if you're confident you'll never need any life insurance component and want to eliminate even the nominal premium. But since the premium drops to zero at 65 regardless, the savings window is narrow and the trade-off is lopsided.

Once you cancel, you cannot re-enroll. If your circumstances change — a new dependent, a health event that makes other coverage unaffordable — Option A is gone.

Option A and the Five-Year Rule

To carry Option A into retirement, you must have been continuously enrolled for the five years immediately before your annuity begins (or since your first opportunity to enroll, if that was fewer than five years ago). If you waived Option A at some point during your career and re-enrolled, the clock restarted at re-enrollment.

This rarely catches people because most federal employees who have Option A have carried it since hire. But if you waived coverage during a life event window and re-enrolled less than five years before retirement, verify your enrollment date with HR before assuming Option A will follow you.

Option A in the Bigger Picture

Option A is a small piece of the total FEGLI package. Its $2,500 post-65 floor won't replace income or cover estate needs. But combined with Basic at 75% Reduction (which provides 25% of your BIA, free after 65), you have a modest, permanent, zero-cost death benefit without any ongoing premium drain.

For most retirees, the real decisions are around Option B (escalating premiums, full or no reduction) and Basic (which reduction election to choose). Option A is the one you can check "keep" and move on.

The FEGLI Decision Guide covers Option A alongside every other component, but the bottom line is simple: the lifetime cost is minimal, the permanent benefit is guaranteed, and the decision is almost always to keep it.

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