Life Insurance Policies for Retired Military Veterans

Written by Jeff Root

Life insurance is a valuable financial asset that can help protect your loved ones in the event of your death. But while the objective value of a life insurance policy remains almost universally clear, the industry itself can often be rather complicated. There are many different variables that are relevant during the underwriting process, and each of these variables is something that should not be willingly ignored.

If you are a retired military veteran, shopping for a life insurance policy can often be significantly different than it would be for an ordinary citizen. Though it is still likely worth the effort to shop around on the open market, you may want to consider purchasing an SGLI or VGLI policy in order to access the best ratio of benefits to costs. Having been a member of the armed forces may enable you to receive group discounts that are not usually available to the general public.

Other things that will be considered during the life insurance underwriting process—the part of the process where they determine what your monthly premiums will be—include your age, certain medical conditions, your disability status, whether or not you smoke, and numerous others. Even if you are not in perfect health, there is still likely at least one life insurance policy that will be able to give you the coverage you deserve. However, these conditions can certainly make the application process significantly more complicated.

This article will briefly examine the different types of life insurance policies that are exclusively available to current or retired members of the American military and how you can decide which policy is best for you.

What Are the Most Common Types of Traditional Life Insurance Plans Available?

Whether you are a veteran of the military or not, you may want to begin the search for a life insurance policy by using a website or independent agent that allows you to accurately compare multiple different life insurance providers and policies at once.

This way, even if you eventually decide to go with a policy that is specifically designed for veterans, you will at least be able to be significantly more confident in your final decision.

Generally speaking, there are two primary types of life insurance available:

Term life insurance

The least expensive type of life insurance and is also typically the easiest to qualify for. With a term life insurance policy, you will pay a monthly premium (which can sometimes be less than $10/month) in exchange for coverage lasting a specific amount of time (usually 10, 20, or 30 years).

Permanent life insurance

Notably more expensive than term life insurance but it also includes several additional benefits. Not only will a permanent life insurance policy cover you for your entire life, it also will usually offer a tangible cash value that can be accessed while you are still alive.

The type of life insurance policy that will be best for you and your family will depend on your current financial situation, your status as a veteran, your health, and your age. Depending on the specific policy you apply for, you may be able to convert a term life insurance policy into a permanent life insurance policy in the future.

What is SGLI?

Servicemember’s Group Life Insurance (SGLI) is a type of affordable term life insurance that is specifically designed for members of the armed forces. Though you will be automatically issued maximum SGLI coverage if you are eligible, you will have the option to decline or modify coverage depending on your current situation.

SGLI is available for a fairly wide variety of individuals. This includes active duty members of the Army, Navy, Air Force, Marines, and Coast Guard. It also includes those commissioned by the NOAA, USPHS, current members of the US military academies, ROTC members, IRR members, and National Guard members who are scheduled to perform at least 12 periods of inactive training each year.SGLI coverage is available from anywhere between $50,000 and $400,000. If you are eligible for coverage, you will also receive 120 days of free coverage following your date of separation. Part-time coverage may also be available for those who don’t qualify for the full policy. Adjustments for those with total disabilities may also be made.

What is VGLI?

Veteran’s Group Life Insurance (VGLI), according to the VA, is a “program that allows you to continue life insurance coverage after you separate from service.” As long as you are willing to keep paying your monthly premiums—which are typically quite low—then your policy will become permanent and cover you for however long you might live.

The amount of VGLI coverage you will be eligible to qualify for will initially be equal (or less, if you prefer) to whatever amount of SGLI coverage you had when you initially separated from service. Then, once you are actively enrolled in the Veteran’s program, you will have the option to increase your total amount of coverage by up to $25,000 every five years until you have reached the maximum amount of $400,000 or the age of 60 (whichever comes first).You will have up to 1 year and 120 days (485 days) following your date of separation to enroll in VGLI. Contrary to most other permanent life insurance policies, if you are able to enroll in the first 240 days following your date of separation, you will not have any need to take a medical exam or answer any health-related questions. If you do have any medical complications—whether these are related to your time in the service or not—it is very important to try to enroll before the 240 day deadline.

Can You Convert Your SGLI/VGLI Life Insurance Policy?

SGLI policies are indeed convertible to VGLI policies and, in fact, these policies are generally designed assuming that you will one day convert. As stated, the amount of time that you will have to convert your SGLI policy into a VGLI policy will be 1 year and 120 days. Converting within 240 days means that your current health will not affect your eligibility in any way. Once the conversion has effectively been made, your life insurance policy will go from being a “term” policy to being a “permanent” one.

What is the Difference Between SGLI and VGLI? What Are Their Gaps in Coverage Compared to Traditional Life Insurance Plans?

Generally speaking, the primary difference between an SGLI policy and a VGLI policy is that while the SGLI policy is designed for those who are actively involved in the military, the VGLI policy is designed for those who are retired (veterans). The primary benefit of having a permanent life insurance policy instead of a term life insurance policy is that coverage is guaranteed for the rest of your life.

Though the cost (which comes in the form of monthly premiums) to benefit (which comes in the form of total coverage) ratio for SGLI and VGLI plans is generally considered to be quite good, some members of the military may prefer to get their coverage from other sources. The primary reasons that you may want to consider looking elsewhere are that you are seeking more than $400,000 in total coverage, you are currently over the age of 60, or you are hoping for a policy with a greater cash value.

What Are the Best Life Insurance Policies for Disabled Veterans?

Because you are automatically enrolled in SGLI coverage while you are an active military member, if you become disabled in the line of duty (or elsewhere), then it would typically make the most sense for you to convert to a VGLI policy as soon as you retire. The lack of a medical examination in the first 240 days makes a VGLI policy especially attractive for those who are disabled.

Additionally, the government offers several other programs for veterans with disabilities. If you are looking for a basic amount of coverage—up to $10,000—you may want to consider enrolling in a benefits program known as Service-Disabled Veterans Insurance (S-DVI).

What Are the Best Life Insurance Options for Military Veterans Besides SGLI and VGLI?

There are also several private life insurance providers that are particularly attractive to military veterans. Some providers are even willing to offer you a discount on their policies as a thank you for your service.

Here are our Top 4 Best Life Insurance Companies for Retired Veterans:

1. United Services Automobile Association (USAA)

Offers life insurance policies that are specifically designed for veterans. If you are able to enroll within 240 days after separation, no medical examination will be required. These policies will completely replace the amount of coverage you were receiving with SGLI.

2. American Armed Forces Mutual Aid Association (AAFMAA)

Is another life insurance provider specifically catering to veterans. Enrollment must take place within 120 days of separation. This particular company also offers cadets enrolled at military academies a free introductory membership.

3. Geico

Is a company that is available for all citizens, but is notably attractive because it offers unique discounts and other programs that are exclusively reserved for veterans.

4. Military Benefit Association (MBA)

Is an excellent option for those who are seeking low rates and high coverage. MBA is often more affordable on a per-dollar basis than SGLI or VGLI and also offers up to $1 million in total coverage.

As a veteran, you will have many different life insurance providers to choose from. If you are able to effectively do your research, understand which options are currently available, and recognize the kind of coverage that is best for you, you will be able to gain the financial protection you deserve.

While choosing the right policy may at first seem obvious because of the existing life insurance policies for veterans, but it is always important when searching for the best life insurance rates to contact an insurance agent who has access to much more information that you, and can quickly help identify the right life insurance policy for you and your family’s needs – all free of charge.

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