Retired military members have several life insurance options, including Veterans' Group Life Insurance (VGLI), Service-Disabled Veterans Life Insurance (S-DVI), and civilian life insurance.
Retiring from the military, like retiring from any job, is a crucial time to reevaluate your finances. Compensation, perks, and benefits change upon retirement or separation from service, including life insurance coverage. Some military retirees go on to new careers and jobs, but some may choose to fully retire, depending on their age, service-connected disabilities, or other factors.
All people retired from the military service are veterans, but not all veterans are military retirees. For the most part, this distinction won’t affect the life insurance plans available to you. We’ll explore the different life insurance options for military retirees and veterans below.
Military retirees have the same life insurance options as veterans, including VGLI, S-DVI, and private civilian insurance.
Seniors who have retired from the military may not need life insurance, depending on their dependents and assets.
The maximum face value amount available through VGLI is $400,000 and the maximum amount available through S-DVI is $40,000.
The amount of time served in the military is the main distinguishing factor between veterans and military retirees. Veteran status refers to anyone who enlisted in the military and was discharged for any reason other than dishonorable, while military retirees have worked in the military for at least 20 years.
For life insurance purposes, this differentiation makes little to no difference in the plans and options available. We cover life insurance options for veterans in-depth here.
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Servicemembers’ Group Life Insurance (SGLI) offers affordable term life insurance coverage to eligible service members. If you had an SGLI policy while you served in the military, you can convert your life insurance to a Veterans’ Group Life Insurance (VGLI) when you separate or retire.
When you leave the military, you only have one year and 120 days to either convert your existing coverage and enroll in a VGLI plan. It’s important to act quickly to avoid any gaps in protection.
If you choose to enroll in the VA-sponsored VGLI policy, then you’re eligible for coverage up to the face value amount you had while serving. For example, if you had a $400,000 SGLI policy (the maximum amount offered) then you’d be eligible for the same amount. One perk to converting between military-sponsored insurance plans is the ability to skip the medical exam if you already have an SGLI policy.
To qualify for VGLI coverage, you must be a former service member or veteran and at least one of the following must be true:
Had part-time SGLI and suffered an injury or disability while serving that disqualifies you for standard insurance rates
Had SGLI while serving and are within one year and 120 days of being released from an active-duty period of 31 or more days
Are within one year and 120 days of retiring or being released from the Ready Reserves or National Guard
Are within one year and 120 days of assignment to the Individual Ready Reserves (IRR) of a branch of service, or to the Inactive National Guard (ING)
Are within one year and 120 days of being put on the Temporary Disability Retirement List (TDRL)
The U.S. Department of Veterans Affairs (VA) has a guide to help veterans convert their policies to private life insurance. Like a VGLI conversion, to qualify for a SGLI policy conversion to a civilian policy, you have one year and 120 days from your last day of service.
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VGLI policies are permanent, so they do not expire as long as you pay premiums. Premium rates are based on your coverage amount and age, similar to private life insurance premiums. VGLI premiums are not fixed, so they will increase as you get older, regardless of your age when you enrolled in the policy.
VGLI monthly premium rates by age for $400,000:
|Age||VGLI 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 to 79||$1,712|
|80 and over||$1,800|
To compare the costs of VGLI to those of a private policy, we pulled numbers for a nonsmoking, 40-year-old male in good health with no family history of disease. When you get a term life insurance policy, the rate stays the same for the length of the entire policy (also known as level term life insurance). For a private $400,000, 30-year term policy, they would pay $59.16 a month for the entire time insured.
VGLI vs. private insurance monthly premium rates by age for $400,000:
|Age||VGLI rates||Private term life insurance rates|
|40 to 44||$64||$59.16|
|45 to 49||$84||$59.16|
|50 to 54||$132||$59.16|
|55 to 59||$240||$59.16|
|60 to 64||$396||$59.16|
Service-Disabled Veterans Life Insurance provides coverage to veterans with a service-connected disability. The VA rates disabilities based on a percentage scale. Totally disabled veterans are eligible for free coverage.
S-DVI is a good option for veterans whose service-connected disability would prevent them from qualifying for a VGLI or private life insurance policy.
Because military retirees may have served for longer than other veterans (at least 20 years), they have specific life insurance considerations depending on their retirement age.
Most seniors don't need life insurance unless they have outstanding debts or beneficiaries. Advanced age also leads to higher life insurance premiums due to the higher risk of mortality. Underlying medical conditions or service-related disabilities may also cause higher life insurance rates.
Aside from a VGLI or private life insurance policy, senior retired military members should consider how much life insurance (if any) they still need. For most seniors, including military retirees and veterans, it’s more cost-effective to put the money you would apply toward those premiums into a stable investment or savings account for your family.
Retired veterans can continue their military-sponsored life insurance if they opted to convert their Servicemembers’ Group Life Insurance (SGLI) to Veterans' Group Life Insurance (VGLI). Otherwise, veterans and military retirees must purchase private life insurance after they separate from service.
Only totally disabled veterans are eligible for free Service-Disabled Veterans Life Insurance through the VA up to $10,000. Veterans who are not totally disabled must pay premiums for life insurance through the VA or for private life insurance.
Military retirees have several life insurance options depending on their qualifications and needs: Veterans' Group Life Insurance (VGLI), Service-Disabled Veterans Life Insurance (S-DVI), and private civilian life insurance are the most popular options available.