What are the optimal life insurance choices for veterans?

Life insurance alternatives for veterans

Veterans have a range of life insurance options, some of which are provided by the U.S. Department of Veterans Affairs, such as Veterans’ Group Life Insurance and Veterans’ Affairs Life Insurance.

You also have the option to acquire life insurance through a private company or convert your existing Servicemembers’ Group Life Insurance (SGLI) policy into a private policy.

Veterans’ group life insurance (VGLI)

All military service members are automatically enrolled in SGLI, a group life insurance plan that can be transformed into VGLI up to one year and four months after leaving the military. [1]

To maintain coverage, you must continue paying premiums during the transition from SGLI to VGLI.

Advantages

One benefit of converting SGLI to VGLI is the ability to receive up to 50% of life insurance proceeds early if diagnosed with a terminal illness or having a life expectancy of nine months or fewer. (Similar to the accelerated death benefit rider in many private life insurance policies.)

Coverage Limits

Coverage is capped at $500,000, and premiums increase with age.

Veterans with pre-existing conditions should consider converting to VGLI within 240 days of release to maintain life insurance coverage while exploring civilian policy options.

Eligibility Requirements

To qualify for VGLI, you must meet at least one of the following criteria:

• Had part-time SGLI as a National Guard or Reserve member, with a duty-related disability disqualifying you for standard insurance rates.

– Had SGLI while in the military and are within one year and 120 days of being released from active duty.

– Within one year and 120 days of assignment to the Individual Ready Reserve (IRR) or a branch of service, or to the Inactive National Guard (ING).

– Within one year and 120 days of being placed on the temporary disability retirement list (TDRL). [2]

Veterans Affairs Life Insurance

In January 2023, the VA introduced Veterans Affairs Life Insurance (VA Life), offering guaranteed issue whole life insurance to veterans under 80 with a service-related disability. [3]

Advantages

No medical exam or health-related questions are required, and premiums remain level throughout the policy.

Coverage Limits

Coverage can be purchased in $10,000 increments, up to a maximum of $40,000, with a two-year waiting period before becoming active.

Eligibility Requirements

To be eligible for VA Life Insurance, you must fit into one of the following categories:

– Veteran aged 80 or younger with a VA disability rating of 0-100%.

– Age 81 or older, within two years of acquiring a new service-connected disability, and applied for VA disability before age 81.

– Age 81 or older, within two years of acquiring a new service-connected disability, and received the disability after turning 81.

VA Life replaces the S-DVI (Service-Disabled Veterans Life Insurance) benefit. Although new applications for S-DVI are not accepted, existing policies can be retained.

S-DVI and VA Life are government-sponsored life insurance products not available through private insurance companies or brokers like Policygenius.

Can veterans purchase private life insurance?

Yes, veterans can opt for individual life insurance through a non-VA company. If under 60, in good health, and planning a new career, a term life insurance policy from a private insurer could be affordable and provide higher coverage amounts.

Term life, being cost-effective and without complex tax restrictions, is a preferred choice for those wanting a financial safety net for their family.

Financial planners often recommend coverage of 10 to 15 times annual income, surpassing VGLI’s $500,000 limit depending on circumstances.

How can veterans acquire private life insurance?

Private life insurance can be purchased directly from an insurer or through an independent broker working with multiple companies.

Clients should be aware that the life insurance application process takes four to six weeks on average. Starting the search before existing coverage expires is advisable.

Alternatively, VGLI or SGLI policies can be converted into private policies directly through the insurer. Some companies collaborate with the military to offer civilian life insurance policies, allowing conversion within 120 days of leaving active duty without a medical exam.

When to convert VGLI into private life insurance

VGLI can be converted into a civilian policy with participating insurers at any time, providing ample opportunity to compare policies. However, conversion is limited to permanent life insurance policies, which tend to be more expensive than alternatives like term life insurance. Depending on age, health, and lifestyle, a cheaper policy may be available elsewhere.

What’s the cost of life insurance for veterans?

A 30-year-old veteran can expect to pay $45 per month for a maximum $500,000 coverage under VGLI, with premiums increasing based on age and coverage amount.

Private term life policies may cost less than VGLI, but personal rates depend on factors like age, gender, health, and lifestyle.

Policygenius agents can assist in determining the most cost-effective private insurance option for informed decision-making.

Best life insurance for retired military

The best life insurance for retired military boils down to VGLI or a private life insurance policy, with options including VGLI, VA Life, and private civilian insurance. Considerations include health and age.

– Health: VGLI may be more economical for managing pre-existing conditions impacting premiums.

– Age: Life insurance becomes pricier with age, making a small amount of VGLI coverage potentially cheaper than a private policy if over 60.

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