Life Insurance For Military Service Members: What You Need To Know

Life insurance is a crucial aspect of financial planning, especially for those serving in the military. The Department of Veterans Affairs offers Servicemembers' Group Life Insurance (SGLI) to active-duty military personnel, providing coverage of up to $500,000. This policy is underwritten by Prudential and offers free coverage for 120 days after leaving the military. SGLI includes traumatic injury protection, providing payments for losses during active duty, such as blindness or amputation. Veterans' Group Life Insurance (VGLI) is another option for former service members, offering renewable term coverage. Additionally, private life insurance is available for military members, though deployment status and job responsibilities may impact the application process. Understanding the different options and their limitations is essential for service members to make informed decisions about their financial security and protection for their loved ones.

Servicemembers' Group Life Insurance (SGLI)

Eligibility

To be eligible for full-time SGLI coverage, you must meet at least one of the following requirements:

• You are an active-duty member of the Army, Navy, Air Force, Space Force, Marines, or Coast Guard.
• You are a commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS).
• You are a cadet or midshipman of the U.S. military academies.
• You are a member, cadet, or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises.
• You are a member of the Ready Reserve or National Guard, assigned to a unit, and scheduled to perform at least 12 periods of inactive training per year.
• You are a volunteer in an Individual Ready Reserve (IRR) mobilization category.

If you are in non-pay status with the Ready Reserve or National Guard, you may still be eligible for full-time SGLI coverage if you meet both of the following requirements:

• You are scheduled for 12 periods of inactive training for the year.
• You are drilling for points rather than pay.

Benefits

SGLI provides a range of benefits, including:

• Coverage up to a maximum of $500,000, in $50,000 increments.
• 120 days of free coverage from the date you leave the military.
• Extension of free coverage for up to 2 years if you are totally disabled when you leave the military.
• Part-time coverage if you are a Reserve member who doesn't qualify for full-time coverage.

Costs

The current basic SGLI premium rate is 6 cents per $1,000 of insurance coverage, which includes an additional $1 per month for Traumatic Injury Protection coverage (TSGLI). For example, for $500,000 worth of coverage, the total monthly premium deduction is $31.

Managing Your Benefits

You can manage your SGLI benefits through the SGLI Online Enrollment System (SOES). You can use SOES to make changes to your level of coverage, choose your beneficiaries, and update your beneficiary information as needed.

Converting to VGLI

When you leave the military, your SGLI coverage will stay in effect for 120 days. After that, you have the option to convert your SGLI to Veterans' Group Life Insurance (VGLI), a similar program. You can also convert your SGLI policy into a civilian policy within 120 days of leaving the military.

Veterans' Group Life Insurance (VGLI)

Veterans Group Life Insurance (VGLI) is a group life insurance policy available for veterans from the U.S. Department of Veterans Affairs (VA). It provides lifetime renewable term coverage for veterans and active-duty service members.

Eligibility

To be eligible for VGLI, you must meet at least one of the following requirements:

• You had part-time Servicemembers' Group Life Insurance (SGLI) as a member of the National Guard or Reserve and suffered an injury or disability while on duty that disqualifies you for standard premium insurance rates.
• You had SGLI while you were in the military and you're within 1 year and 120 days of being released from an active-duty period of 31 or more days.
• You're within 1 year and 120 days of retiring or being released from the Ready Reserve or National Guard.
• You're within 1 year and 120 days of assignment to the Individual Ready Reserve (IRR) of a branch of service or to the Inactive National Guard (ING). This includes members of the United States Public Health Service Inactive Reserve Corps (IRC).
• You're within 1 year and 120 days of being put on the Temporary Disability Retirement List (TDRL).

Benefits

With VGLI, you can get between $10,000 and $500,000 in term life insurance benefits. The amount you'll receive is based on your SGLI coverage amount when you left the military. You can also increase your coverage by $25,000 every 5 years, up to $500,000, until you turn 60.

Application Process

To apply for VGLI, you must do so within 1 year and 120 days of leaving the military. If you apply within 240 days, you don't need to prove you're in good health. After the 240-day period, you'll need to submit evidence of good health. You can apply through the Office of Servicemembers' Group Life Insurance (OSGLI) online or by mail/fax.

Premium Rates

VGLI premium rates are based on your age and the amount of insurance coverage you want. You can find the monthly premium rates on the official website as of April 1, 2021.

Beneficiaries

Yes, you can choose your beneficiaries and change them as needed. You can update your beneficiary information by accessing your policy online or by filling out and submitting a VGLI Beneficiary Designation form.

Conversion to Commercial Policy

You can convert your VGLI policy into a commercial (civilian) policy at any time. You'll be able to convert at standard premium rates without providing proof of good health. To convert your policy, choose a new insurance company, apply at their local sales office, and provide them with a VGLI Conversion Notice from OSGLI.

Service-Disabled Veterans' Life Insurance (S-DVI)

Service-Disabled Veterans Life Insurance (S-DVI) is a life insurance coverage option provided by the U.S. Department of Veterans Affairs (VA) for veterans with service-connected disabilities. To be eligible for an S-DVI policy, veterans must meet specific criteria, including being released from active duty without a dishonorable discharge on or after April 25, 1951, having a service-connected disability rating, and being in good health, except for any service-related conditions. Additionally, the application must be submitted within two years of receiving the disability rating.

The S-DVI program offers low-cost coverage, and the premium amount depends on factors such as the insurance amount, the chosen coverage plan, and the payment frequency (monthly or annually). Veterans with total disabilities may be eligible for a premium waiver on the basic S-DVI policy. However, if they have supplemental S-DVI coverage, they must pay the premiums for this additional insurance.

It is important to note that the S-DVI program stopped accepting new applications after December 31, 2022. However, veterans who already have S-DVI coverage can choose to keep it or apply for the new Veterans Affairs Life Insurance (VALife) program, which started accepting applications on January 1, 2023. If S-DVI policyholders apply for VALife by December 31, 2025, they can retain their S-DVI coverage during the two-year waiting period for VALife benefits. On the other hand, if they apply on or after January 1, 2026, their S-DVI coverage will end upon approval of the VALIFE application, and they will only need to pay VALife premiums during the waiting period.

Veterans' Mortgage Life Insurance (VMLI)

• They must have a severe disability that was caused or made worse by their military service.
• They must have received a Specially Adapted Housing (SAH) grant to modify their home to live more independently. This could include installing ramps or widening doorways.
• They must hold the title of their home.
• They must have a mortgage on the home.
• They must be under 70 years old.

VMLI provides up to $200,000 in mortgage life insurance, which is paid directly to the bank or lender that holds the mortgage. The coverage amount is determined by the outstanding mortgage balance and decreases as the loan is paid off. If the mortgage is paid off, the VMLI coverage ends. It is important to note that VMLI does not have any loan or cash value, and it does not pay dividends.

To apply for VMLI, veterans must first apply for an SAH grant. If approved for the grant, the loan guaranty agent will determine eligibility for VMLI. The application process involves filling out a Veterans' Mortgage Life Insurance Statement (VA Form 29-8636). It is important to note that VMLI applications must be submitted before the veteran's 70th birthday.

The cost of VMLI premiums depends on the current mortgage balance, the remaining number of mortgage payments, and the desired amount of coverage. A VMLI Premium Calculator is available to help estimate the premium amount.

If a veteran moves, refinances, or makes other changes to their mortgage, they must notify the Department of Veterans Affairs Regional Office and Insurance Center. Additionally, if a veteran refinances their home after obtaining VMLI, their premium may increase if they have a higher mortgage loan amount, a longer loan term, or more VMLI coverage.

Family Servicemembers' Group Life Insurance (FSGLI)

Eligibility for FSGLI:

To be eligible for FSGLI, one must be the spouse or dependent child of an active-duty service member or a member of the Ready Reserve who has full-time SGLI coverage. A dependent child can be the natural child, legally adopted child, stepchild, or a child between the ages of 18 and 23 who is a full-time student or became permanently incapable of self-support before turning 18.

Coverage Details:

FSGLI offers a maximum coverage of $100,000 for the spouse, not exceeding the service member's SGLI coverage amount, and a $10,000 coverage for each dependent child. Spouses of service members are automatically covered if they are civilians, but military spouses must apply for coverage. The cost of spousal coverage varies based on age and the desired amount of coverage, with premiums increasing as the spouse ages. It is important to note that dependent children are automatically covered at no additional cost to the service member.

Applying for FSGLI:

If the spouse is not automatically covered, the service member can enrol them through the SGLI Online Enrollment System (SOES). Any changes or updates to spousal coverage can also be made through SOES. It is important to ensure that the spouse is signed up in the Defense Enrollment Eligibility Reporting System (DEERS) to facilitate automatic premium deductions from the service member's pay.

Converting FSGLI to an Individual Policy:

Spouses have the option to convert their FSGLI coverage to a permanent, individual insurance policy within 120 days from specific events, such as the service member's separation from the military or their election to end SGLI coverage. After conversion, the spouse becomes solely responsible for all aspects of the new policy, including premium payments.

In summary, Family Servicemembers' Group Life Insurance (FSGLI) is a vital component of the Servicemembers' Group Life Insurance (SGLI) program, offering financial security to the families of service members. It provides coverage for spouses and dependent children, with varying eligibility and coverage requirements. Understanding and effectively managing FSGLI benefits can ensure that military families have the necessary protection during their service member's dedicated career.

Frequently asked questions