PolicyScout's Guide to Life Insurance for Veterans
Find Out Which Life Insurance Plans Are Available to Veterans and How You Can Apply.
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According to the U.S. Census Bureau’s 2021 statistics, there are around 19 million U.S. veterans registered with the Department of Veterans Affairs (VA).
If you're a member of the armed forces who is about to retire, getting proper life cover is probably on your mind.
This article will explain life insurance for veterans in the U.S., the different types of coverage available, and how much it will cost.
Who Is Considered a Veteran?
There is a lot of confusion when it comes to who can be classified as a veteran. Here is a simple list of requirements to be considered a veteran, according to the Department of Defense (DoD).
A service member must have:
180 days of consecutive active duty, excluding training.
One day in a combat zone: served on active duty during a period of war or in a campaign or expedition for which a campaign badge was authorized.
What Is a Campaign Badge?
A campaign badge or campaign medal is a military decoration that is awarded to a member of an armed force who served in a designated military operation or performs duty in a geographical theater.
Served in the National Guard or Reserve for 20 years and retired under honorable conditions. This regulation was passed in 2016.
What Does It Mean to Retire Under Honorable Conditions?
To receive an honorable discharge, a service member must have received a rating from good to excellent for their service.
Service members who meet or exceed the required standards of duty performance and personal conduct receive honorable discharges.
The Department of Veterans’ Affairs (VA) is, however, a bit more lenient with its definition of a veteran and defines them as a person who:
Served in the active military, naval, or air service.
Was discharged or released therefrom under conditions other than dishonorable.
The VA’s definition is applicable in this article.
Source: Unsplash
What Is Veterans’ Group Life Insurance (VGLI)?
VGLI is a group life insurance program for military veterans, with premiums that are based on the veteran’s age.
It allows for Servicemembers' Group Life Insurance (SGLI) coverage to be changed to a renewable term policy of insurance after a service member leaves the military.
How Is VGLI Paid Out?
Up to $400,000 of insurance coverage can be paid out. It is paid in $10,000 increments up to the amount of SGLI the member had at the time of their separation from the military.
VGLI premiums are based on the age of the person who is leaving the military. People who have insurance for less than $400,000, can buy extra coverage of $25,000 every five years until they are 60.
Any of the participating commercial insurance companies will be able to convert it to a commercial life insurance policy for you at any time.
Not all participating companies offer conversion in all 50 states or overseas, but they are:
American Fidelity Life Insurance Company
Bankers Life and Casualty Company
EMC National Life Company
Guardian Life Insurance Company
Life Insurance Company of Alabama
Massachusetts Mutual Life Insurance Company
Metropolitan Life Insurance Company
New York Life Insurance Company
Northwestern Mutual Life Insurance Company
Prudential Insurance Company of America
Trans World Assurance Company
What Is a Commercial Life Insurance Policy?
All life insurance is designed to cover specific aspects of the insured's life.
Commercial life insurance policies apply to your business and could include coverage to protect your business in the event of your passing or in the event of a key employee’s death.
Who Is Eligible for VGLI?
If you recently left the U.S. military and had prior coverage through them or a military service-connected disability, you may be eligible for VGLI.
What Is Service-Disabled Veterans Insurance (S-DVI)?
Veterans who have been given a service-connected disability rating by the Department of VA get life insurance through Service-Disabled Veterans Insurance (S-DVI).
In order to qualify for S-DVI, you must be a veteran of the uniformed services who meets the following criteria:
You were released from active duty under other than dishonorable conditions.
You were rated for a service-connected disability (even if only 0 percent).
You are in good health except for any service-connected conditions.
You apply within two years from the date VA grants your new service-connected disability.
The basic S-DVI program, also known as RH Insurance, offers life insurance for veterans of up to $10,000.
You can also get VGLI if you are within 1 year and 120 days of any of the following events:
You are released from active duty.
You are separated, retired, or released from an assignment from the reserves.
You are assigned to the Individual Ready Reserves (IRR) or Inactive National Guard (ING).
You are placed on the Temporary Disability Retirement List (TDRL).
Life Insurance Benefits of VGLI: Pros and Cons
Active duty servicemembers enjoy very low term life insurance premiums through SGLI, and once out of the service, the VGLI kicks in.
While this sounds great initially, as you get older, VGLI may no longer be your best option.
Let’s look at the pros and cons of VGLI.
Pros
There are many benefits to VGLI, which is why most veterans still make use of it. Some include:
You can’t be turned down for VGLI as an eligible veteran.
There are no health questions, lab tests, or life insurance medical exams, as long as you enroll within 240 days of leaving your role in the military.
There are no penalties for your health. So no physical or mental health issues affect your premiums.
The death benefit for VGLI never decreases unless you request it.
The policy remains in force as long as premiums are paid.
There are no membership or enrollment fees. So it operates like many group life insurance programs offered by private employers.
Source: Unsplash
Cons
Even though most veterans still choose VGLI as their life insurance coverage, more veterans (especially older ones) are realizing that it might not be the best option.
Here are a few downsides to VGLI:
Your coverage is linked to how much SGLI coverage you had. You can get more coverage, but only by up to $25,000 every five years.
VGLI rates are cheap for young veterans, but not when you get older. VGLI coverage costs more as you get older because your premiums are only affected by your age.
VGLI only offers term life insurance, which means that the policy has a death benefit but doesn't build up any cash value.
You can only get VGLI one year and 120 days after you leave the military. After that, the window shuts.
The death benefit cap is quite low. If you want a death benefit of higher than $400,000, you'll need to get more insurance.
What Is Servicemembers Group Life Insurance (SGLI)?
The two main differences between Servicemembers Group Life Insurance (SGLI) and Veterans’ Group Life Insurance (VGLI) are:
The insured person’s eligibility.
The cost of the insurance.
Source: Unsplash
Because VGLI requires an individual to no longer actively serve in the military, a person can’t be eligible for both SGLI and VGLI.
SGLI is a group life insurance program available to all active duty and reserve members of the uniformed services of the United States—supervised by the United States Department of VA.
It is a low-cost group life insurance policy. Everyone who is eligible for SGLI pays the same premiums, regardless of:
Age
Gender
Health
Other factors
Private Life Insurance Policies for Veterans
For veterans who may not be able to get life insurance through the Department of VA, private insurance companies can help.
They can help veterans who want to look into other life insurance options, including all types of life insurance: term life, whole life, and universal life insurance.
Private term life insurance offers benefits up to several million dollars and competitive pricing, but isn’t always available or affordable for veterans with complex medical conditions.
For example, if you are a veteran then the American Armed Forces Mutual Aid Association (AAFMAA) offers you term life policies up to $800,000 and whole life policies up to $1 million.
Private insurance providers do charge a lot more each month than VGLI.
However, the VGLI $400,000 cap on coverage may not be enough for many veterans. This is where private options come in.
Source: Unsplash
Some insurance companies partner with the military to offer civilian life insurance policies to veterans.
Members with SGLI have 120 days from the day they leave active duty to convert their policy to a private life insurance policy with a participating provider.
You don’t need a medical exam to convert your policy, so you’ll be approved for the same amount of SGLI coverage you had at a predetermined rate.
If you know you want a private insurance policy but have health concerns that would raise your rates, this is worth considering.
However, because of the 120-day rule, you have a shorter window to compare quotes for your new policy than veterans who have VGLI.
A PolicyScout agent can help you choose the best life insurance for your circumstances.
How Much Does Life Insurance Coverage for Veterans Cost?
VGLI is a term life insurance policy where the premiums increase over time.
They are based on how much coverage you have and your age. If you want to get $400,000 worth of coverage, here are the VGLI premiums by age group:
| Age | Monthly Premium |
|---|---|
| 29 and under | $28 |
| 30 to 34 | $36 |
| 35 to 39 | $48 |
| 40 to 44 | $64 |
| 45 to 49 | $84 |
| 50 to 54 | $132 |
| 55 to 59 | $240 |
| 60 to 64 | $396 |
| 65 to 69 | $588 |
| 70 to 74 | $904 |
| 75 and older | $1,712 |
Life Insurance Options for Veterans
If you're a recent veteran who is thinking about getting life cover after your service, there are four routes you can take.
Let SGLI Expire and Buy Private Life Insurance: This option is best for veterans who don't have bad health problems and can get a civilian policy that is cheaper than VGLI.
Make sure to start the process of applying for private insurance as soon as possible if you want to get one.
Convert SGLI to VGLI: If you want to keep your military-provided life insurance benefits you will have to change to VGLI within 485 days of leaving active duty.
Compare your premium to quotes for private life insurance to see if you're getting the best deal for your money.
Convert SGLI to Private Life Insurance: Some private life insurance providers will allow you to change your SGLI policy into a civilian one within 120 days of leaving active duty without having to take a medical exam.
This might be a good idea for veterans who have health problems and know they want to get private insurance.
Convert SGLI to VGLI, then Convert VGLI into Private Coverage: A very small number of private life insurance companies let you change your VGLI policy into a civilian policy at any time without having to go through a health check.
This will give you more time to look at private insurance quotes to make sure you're getting the best deal possible.
If you’re interested in learning more about private life insurance or have a specific question that you want answered, PolicyScout can help.
Where to Learn More about Life Insurance for Veterans
When you’re a member of the military, many of your needs are taken care of, including access to inexpensive life insurance coverage for you and your family.
However, the transition to civilian life can be difficult, and figuring out your own life insurance plan is one of the challenges.
VA life insurance policies aren't your only option. In some cases, buying coverage on your own might be your best bet.
If you are a veteran and interested in learning more about your life insurance options, visit our Life Insurance Hub to read our latest articles.
We cover topics that will help you make sense of life insurance coverage and help you find the coverage you need.
Reach out on 1-888-912-2132 or help@policyscout.com to get one-on-one assistance with your life insurance questions. Our life insurance agents can assist if you have any questions or want to speak to someone about your life cover options.