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Veterans and soon-to-be veterans looking for life insurance have unique considerations, and options, when their active-duty service is complete.
Many active-duty 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 convert your Servicemembers’ Group Life Insurance (SGLI) policy to a Veterans’ Group Life Insurance (VGLI) policy; buy life insurance from a private insurer; or convert your policy to private life insurance.
While the Department of Veterans Affairs (VA) provides life insurance coverage, it comes with its own limitations. For example, the maximum death benefit for veterans is capped at $400,000 and may not come with extended coverage options. There are other reasons why you might choose to purchase a policy from a private life insurance company instead. Below, we’ll explore the different options for veterans looking for life insurance coverage.
The Department of Veterans Affairs (VA) offers life insurance policy options for veterans
As a veteran, your life insurance death benefit ranges from $10,000 to $400,000 based on the amount of Servicemembers' Group Life Insurance (SGLI) coverage you had when you left the military
To keep SGLI life insurance 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)
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 so military members receive payment in certain conditions such as amputations, paraplegia, and blindness.
After you leave active duty, the life insurance coverage provided by the military remains active for 120 days, so it’s important to act quickly to avoid a policy lapse.
The VA also offers other life insurance programs if you wish to continue getting coverage through them:
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, at no additional cost. More information about SGLI-DE is available from the VA.
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.
Former military members can keep the life insurance policies they had during active-duty by converting them into Veterans' Group Life Insurance (VGLI).
You’ll have to continue paying premiums as you transition from SGLI to VGLI to keep the coverage in force.
One of the benefits of converting SGLI to VGLI is that you’ll retain the ability to receive up to 50% of your life insurance proceeds early if you have a life expectancy of nine months or fewer. (This is similar to the accelerated death benefit included in many life insurance policies.)
More information about VGLI is available on the VA website. We’ll discuss how to convert your policy and the premium rates below.
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 for your application to go through the underwriting process, and even longer if you have a complicated medical history and the life insurance company requests your medical records.
If you purchase private life insurance, you have the option of buying a permanent life insurance policy, such as whole life, or a term life insurance policy. Term life policies, where 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.
If you want to keep your military-provided life insurance benefits, you’ll have to follow a timeline as outlined by the VA, once you retire (the date you leave active duty.)
|Time after leaving active duty||SGLI coverage||VGLI coverage|
|0 to 120 days||Yes||Available without underwriting|
|120 to 240 days||No||Available without underwriting|
|240 to 485 days||No||Medical underwriting required to convert|
|485 days||No||Not 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 of 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 longer than 240 days, you’ll have to go through this process and could be denied a policy or may receive higher premium rates based on the results of your exam.
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 most affordable life insurance rates.
You can apply for the conversion via paper application or through an online application on the VA’s website.
VGLI is a permanent life insurance policy — it never expires as long as you pay premiums. The premium rates are based on your coverage amount and age. VGLI premiums increase as you get older, regardless of how old you were when you got the policy. These are the VGLI premium rates by age for the max coverage amount ($400,000):
|Age||VGLI Monthly 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 by an average of about 54% by age group.
To compare the costs of VGLI to those of 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 life insurance policy, the rate stays the same for the length of the entire policy. For a private $400,000, 30-year term policy, he would pay $35.77 a month (that’s about $430 a year).
Here’s a look at the monthly costs of VGLI vs. private life insurance policy over 30 years:
|Age||VGLI rates (monthly)||Private term life insurance rates (monthly)|
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 more than $44,000 in total for VGLI premiums, whereas you would pay closer to $12,900 in total for private term life insurance premiums.
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 or a family history of heart disease, your monthly premiums for the same private term policy might be closer to $100, based on policies offered by Policygenius in 2020. In that case, you'd pay $25,200 for a private term policy over 20 years. But that is still nearly half the amount you'd pay for the same benefits through VGLI.
When comparing your life insurance options, an insurance expert can help you calculate which policy makes the most sense. 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, including outstanding mortgages or dependents, that may not be enough coverage.
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The number of veterans diagnosed with post-traumatic stress disorder (PTSD) varies by service era. The VA estimates that between 11-20% of veterans who served most recently in Operations Iraqi Freedom (OIF) and Enduring Freedom (OEF) have PTSD in a given year.
If you have been diagnosed with 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 company will want to see a long history (generally over 12 months) of successful treatment with medication and therapy and evidence that you can work. You likely will still be able to get coverage if you have PTSD, but your rates will be higher if the condition is more difficult to manage, according to quotes offered by Policygenius in 2020.
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.
There are 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, but other disabilities and medical conditions as well, 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 60 years or older and applying for life insurance, you’ll find that a private life policy can be very expensive. Even VGLI premium rates can 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 per month for a $20,000 benefit. Veterans converting to a VGLI policy by contrast would only pay $30 per month.
SGLI (Servicemembers' Group Life Insurance) is a policy you have while you serve and VGLI (Veterans’ Group Life Insurance) is a policy you can have after you retire from active duty.
The VA supplements some costs associated with life insurance policies for veterans, but only veterans with qualifying disabilities are eligible for free coverage. The VA grants disability status to veterans who are either unable to work or who have one of the following conditions: total loss of hearing in both ears; loss of speech; permanent (long-lasting) loss of use of both of your hands, feet, or eyes or one hand and one foot, or one hand or foot and one eye. It can be more cost-effective for veterans to convert a VA life insurance policy to a private policy in some cases, but the premiums will vary based on medical history and age.
Veterans with disabilities have a few different life insurance options. The VA offers two years of free Servicemembers’ Group Disability Extension (SGLI-DE) life insurance continuation for veterans who are disabled at the time of their discharge. Veterans also have the option to enroll in Service-Disabled Veterans Insurance (S-DVI), which offers a small coverage amount for those with disabilities. Additionally, there are private life insurance options for people with disabilities, including veterans, but it may be harder to secure coverage.
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