Q. I plan to retire Jan. 3. In Federal Employees’ Group Life Insurance, I have $55,000 basic and three times Option B for a total of $161,000 of insurance. I have paid 38 years into FEGLI and recently found out that when I turn 65 years old, my insurance reduces to nothing. Due to health conditions — cancer three years ago and diabetes — finding whole life insurance is very expensive and hard to afford. If I have $55,000 of basic insurance and decide to reduce my insurance by 50 percent, which leaves $27,500, how much does my family receive if I should die at 80 years old or older? The same with my Option B, three times my salary? What other options do I have? I need to leave my family with something.
A. Let’s deal with basic insurance first. When you retire, you’ll have a decision to make about the amount of coverage you want to keep. Up to age 65, you’ll continue to pay your current premiums. After that, it will depend on the option you elect. If you want to keep the same coverage, you’ll have to pay more for that benefit. If you want to keep only half of that coverage, you’ll also pay more, but not as much as if you’d elected full coverage. If you elect the 75 percent reduction, the remaining coverage will be free.
Now to Optional Part B insurance. When you retire, you’ll also have to decide how much coverage you want beginning at age 65. You can choose to retain full coverage or full reduction. In either case, the premiums you’ll pay until age 65 will continue to rise. If you elect full coverage, they will rise even more. If you elect the full reduction, at age 65 you will pay no further premiums, but your coverage will decline at a rate of 2 percent per month until they reach zero.