Life insurance for veterans

How to protect your family after you’ve protected your country.

Elissa

Elissa Suh

Published October 7, 2019

KEY TAKEAWAYS

  • The VA offers life insurance options for veterans

  • A veteran’s death benefit is $400,000

  • To keep the life insurance you get as a service member after you retire, you must pay premiums, which increase with age

  • You may be able to skip the medical exam when you get Veterans’ Group Life Insurance (VGLI)

Active-duty military personnel have to take extra considerations when applying for life insurance, but veterans and soon-to-be veterans buying life insurance have unique needs as well.

Many military personnel already have a life insurance policy, and when they leave the armed forces they have a few different options as to what they can do. Most commonly you can:

  1. Convert your servicemen policy to a veterans policy
  2. Buy life insurance from a private insurer
  3. Convert your policy and buy private life insurance

While the VA provides life insurance coverage, it comes with its own limitations. There are reasons why you might choose to purchase a policy from a private life insurance company instead. For one thing, the maximum death benefit for veterans is capped at $400,000 and may not come with extended coverage options.

In this article:

Military-provided life insurance

All military service members are automatically enrolled in a group life insurance plan called Servicemembers’ Group Life Insurance (SGLI), which has a maximum coverage amount of $400,000. It also includes traumatic injury protection — military members will receive a payment in certain conditions such as amputations, paraplegia, and blindness.

After you leave active duty, the life insurance coverage provided by the military will remain for 120 days. The Department of Veterans Affairs also offers other life insurance programs if you wish to continue getting coverage through them.

Servicemembers’ Group Disability Extension (SGLI-DE)

Servicemembers who are totally disabled at the time of discharge may apply to keep their SGLI coverage for an additional two years after their service separation date. More information about SGLI-DE is available from the VA.

Service-Disabled Veterans Insurance (S-DVI)

Military veterans who have received a service-connected disability rating by the VA may be eligible to receive Service-Disabled Veterans Insurance (S-DVI) which offers $10,000 in life insurance coverage. A premium waiver is also available.

If you qualify for waived premiums, you may apply for the Supplemental S-DVI Program, which offers eligible veterans with a service-related disability an additional $30,000 in coverage with additional premiums.

More information about both programs Service-Disabled Veterans Insurance (S-DVI) is available from the VA.

Veterans Group Life Insurance (VGLI)

Former military members can keep the life insurance policies they had as active-duty servicemen by converting them into Veterans Group Life Insurance (VGLI).

You’ll have to continue paying premiums as you transition from SGLI to VGLI. More information about VGLI is available on the VA website. We’ll discuss how to convert your policy and the premium rates later.

One of the benefits includes the ability to receive up to 50% of your life insurance proceeds early, if you have a life expectancy of nine months or less. (This is similar to the accelerated death benefit, included in many life insurance policies.)

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Life insurance options after leaving service

1. Let SGLI expire and buy private life insurance

If you want to purchase a policy from a private insurer and you don’t want a gap in coverage, you need to start the life insurance application process as soon as possible. After you apply for private life insurance coverage, it can take six to eight weeks (42 to 56 days) for your application to go through underwriting, longer if you have a complicated medical history and the life insurance carrier requests your medical records.

If you purchase private life insurance, you have the option of buying a whole life or term life insurance policy. Term life policies, for which you pay for coverage for a set amount of time, are the best choices for most people.

Learn more about term vs. whole life insurance and which is right for you.

2. Convert SGLI to VGLI

If you want to keep your military-provided life insurance benefits, you’ll have to follow timeline once you retire (the date you leave active duty.

After leaving active dutySGLI coverageVGLI coverage
0 to 120 daysYesAvailable without underwriting
120 to 240 daysNoAvailable without underwriting
240 to 485 daysNoMedical underwriting required to convert
485 daysNoNot available

If you are planning on getting VGLI, start the process early to ensure that you don’t leave a gap in coverage. One of the benefits to converting earlier rather than later is that you will not be subject to a medical exam, which includes questions about your health and medical history. If you wait until after 240 days, you’ll have to go through this process and could be denied a policy or offered higher premium rates based on the results of your exam.

Learn more about the life insurance medical exam.

3. Convert SGLI to VGLI and buy private life insurance

If you have a complicated medical history or an injury or medical condition that may make a private insurance policy prohibitively expensive, it may make sense to convert your SGLI policy to VGLI during the first 240 days after retirement when you have guaranteed coverage.

You can still shop around for life insurance, and if you find a better deal on a private policy, you can let the VGLI coverage lapse. But if you're worried about qualifying for life insurance, converting your SGLI to VGLI might be a good safety measure since it could mean the difference between having some protection and having none at all.

If you're planning to apply for private life insurance, Policygenius can give you free life insurance quotes and help you choose the best insurer for your needs. If those rates come back higher than expected, we can shop your application around to find the company that will give you the best life insurance rates.

You can apply for the conversion via paper application or through an online application on the VA’s website.

How much does life insurance for veterans cost?

VGLI is a permanent life insurance policy — you pay premiums for as long as you have the policy. The rates are based on your coverage amount and age. VGLI premiums increase as you get older, regardless of how old you are when you got the policy. These are the VGLI premium rates by age for the max coverage amount ($400,000):

AgeMonthly premium
29 and under$32
30 to 34$40
35 to 39$52
40 to 44$68
45 to 49$88
50 to 54$144
55 to 59$268
60 to 64$432
65 to 69$600
70 to 74$920
75 and older$1,840

As you can see, the premium rates go up roughly 30% to 50% every five years.

To compare the costs to a private policy, we pulled numbers for a healthy nonsmoking, 30-year-old male with no family history of disease. When you get a term insurance policy, the rate that you get stays the same for the length of the entire policy. For a private $400,000, 30-year term policy, he would pay $34 a month (that’s $408 a year).

Here’s a look at the monthly costs of VGLI and a private life insurance policy over the course of 30 years:

AgeVGLI rates (monthly)Private rates (monthly)
30 to 34$40$34
35 to 39$52$34
40 to 44$68$34
45 to 49$88$34
50 to 54$144$34
55 to 59$268$34
60 to 64$432$34

If you're a 30-year-old in good health when you apply for a private policy, you will pay nearly six times less for the same amount of coverage provided by the VGLI policy. Over 30 years, you will pay over $44,000 in total for premiums for veterans’ group insurance, whereas you would pay closer to $8,500 in total for premiums for private life insurance.

As this illustrates, a term life insurance policy from a private life insurance company can be a lot more affordable if you're healthy.

If you're not healthy, the savings may not be as great, but they're still there. For example, if you have a more complicated health history, including hospitalizations and a family history of heart disease, your monthly premiums for the same private term policy might be closer to $100. In that case, you'd pay $25,200 for a private term policy over 20 years. But that is still half the amount you'd pay for the same benefits through VGLI.

When comparing your life insurance options, you have to do the math to decide what makes sense for you. Additionally, it’s also possible that you could get more coverage (a larger death benefit) from a private life insurance policy at the same or lower rates than your VGLI policy.

Remember that the life insurance from the VA caps out at $400,000. Depending on your circumstances, that may not be enough. Learn more about how life insurance you need here.

Life insurance for veterans with PTSD

If you have been diagnosed with post-traumatic stress disorder (PTSD), it may be difficult for you to purchase a private life insurance policy at an affordable rate, especially if the diagnosis is new or if you're unemployed because of it.

Though applicants are viewed on a case-by-case basis, the life insurance carrier will want to see a long history (generally over 12 months) of successful treatment with medication and therapy and evidence that you can work.

Some private insurers are more friendly to veterans with post-traumatic stress than others, and a Policygenius agent can help you find the best insurance company for you.

When to choose VGLI over private life insurance

There certain instances when it makes sense to get VGLI instead of private coverage. The biggest reason why someone might choose VGLI is if you have medical conditions that make it hard to qualify for traditional life insurance. This isn’t just limited to PTSD that we mentioned before, but other disabilities and medical conditions, including those you might have acquired from combat. Mental health conditions, neurological conditions, and heart conditions, can all affect your ability to get insured. If you apply for a VGLI policy within the first 240 days after you become eligible, you will not have to undergo a medical exam.

If you are past your 60s and applying for life insurance, you’ll find that a private life policy can be very expensive. Even VGLI premium rates get very costly the older you are. But, if you are an older individual looking for lower coverage amounts to cover final expenses, VGLI premium rates might be more affordable.

For example, private final expense insurance for individuals in their late 60s is about $200 a month for a $20,000 benefit. Veterans converting to a VGLI policy by contrast would only pay $30.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.