Borrowing On Veterans Group Life Insurance: Is It Possible?

Veterans' Group Life Insurance (VGLI) is a type of life insurance offered to former members of the military. It is a continuation of the Servicemembers' Group Life Insurance (SGLI) coverage that is offered to active military personnel. VGLI provides coverage of up to $500,000 in death benefits, which can be adjusted if needed. Unlike level term life insurance policies, VGLI premiums increase with age. While VGLI may be a good option for those who want guaranteed acceptance and no medical exam, it may not be the most cost-effective solution for older veterans.

Eligibility requirements for VGLI

To be eligible for Veterans' Group Life Insurance (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 disqualified you for standard premium insurance rates.
• You had SGLI while you were in the military and are within 1 year and 120 days of being released from an active-duty period of 31 or more days.
• You are within 1 year and 120 days of retiring or being released from the Ready Reserve or National Guard.
• You are 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 are within 1 year and 120 days of being put on the Temporary Disability Retirement List (TDRL).

VGLI is a term policy for ex-members of the military that allows them to continue the group coverage they had while in active service. It offers $10,000 to $400,000 in life insurance benefits, based on the amount of coverage the veteran had upon leaving the military.

Veterans have one year and 120 days from the date they leave the service to exercise this option. If they apply to convert their SGLI to VGLI within the first 240 days after completing their service, they are not subject to any health review or exam. If they sign up after the initial 240-day period, they need to submit evidence of good health.

Applying for VGLI

Veterans' Group Life Insurance (VGLI) allows veterans to convert their Servicemembers' Group Life Insurance (SGLI) to a civilian program of lifetime renewable term coverage after separation from service.

Eligibility for VGLI

You may be eligible for VGLI if you 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 disqualified 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).

To apply for VGLI, you must do so within 1 year and 120 days of leaving the military. If you apply within 240 days of leaving the military, you won’t need to prove you’re in good health. If you apply after the 240-day period, you’ll need to submit evidence that you’re in good health.

You can apply for VGLI in one of the following ways:

• Apply through the Office of Servicemembers’ Group Life Insurance (OSGLI), using the Prudential website.
• Apply by mail or fax. Fill out the Application for Veterans’ Group Life Insurance (SGLV 8714).

To reinstate a VGLI policy that has expired, you’ll need to fill out an Application for Reinstatement of VGLI Coverage (SGLV 180).

VGLI monthly premium rates

The VGLI premium rates are based on your age and the amount of insurance coverage you want. The rates were last updated on April 1, 2021. Below is a table of the monthly premium rates:

| Coverage Amount (in $) | Monthly Premium Rate (in $) |

|---|---|

| 10,000 | 5 |

| 20,000 | 9 |

| 30,000 | 14 |

| 40,000 | 18 |

| 50,000 | 23 |

| 60,000 | 27 |

| 70,000 | 32 |

| 80,000 | 36 |

| 90,000 | 41 |

| 100,000 | 45 |

| 110,000 | 50 |

| 120,000 | 54 |

| 130,000 | 59 |

| 140,000 | 63 |

| 150,000 | 68 |

| 160,000 | 72 |

| 170,000 | 77 |

| 180,000 | 81 |

| 190,000 | 86 |

| 200,000 | 90 |

| 210,000 | 95 |

| 220,000 | 99 |

| 230,000 | 104 |

| 240,000 | 108 |

| 250,000 | 113 |

| 260,000 | 117 |

| 270,000 | 122 |

| 280,000 | 126 |

| 290,000 | 131 |

| 300,000 | 135 |

| 310,000 | 140 |

| 320,000 | 144 |

| 330,000 | 149 |

| 340,000 | 153 |

| 350,000 | 158 |

| 360,000 | 162 |

| 370,000 | 167 |

| 380,000 | 171 |

| 390,000 | 176 |

| 400,000 | 180 |

| 410,000 | 185 |

| 420,000 | 189 |

| 430,000 | 194 |

| 440,000 | 198 |

| 450,000 | 203 |

| 460,000 | 207 |

| 470,000 | 212 |

| 480,000 | 216 |

| 490,000 | 221 |

| 500,000 | 225 |

You can also increase your coverage by $25,000 every 5 years, up to $500,000, until you turn 60.

VGLI vs. term life insurance

Veterans' Group Life Insurance (VGLI) is a type of group term life insurance offered to former members of the military. It allows veterans to convert their Servicemembers' Group Life Insurance (SGLI) to a civilian program of lifetime renewable term coverage after leaving the service.

Eligibility

To be eligible for VGLI, you must have had SGLI coverage during your military service and apply for VGLI within 1 year and 120 days of leaving the service. If you are a smoker or have a pre-existing medical condition, you will need to sign up for VGLI within 240 days of leaving the service to get coverage without a medical exam.

Term life insurance policies in the civilian market may also have eligibility criteria based on age, health, and other factors.

Premiums

VGLI premium rates are based on your age and the amount of insurance coverage you want. The rates increase as you get older and can become expensive for older veterans.

Term life insurance policies in the civilian market typically offer fixed rates for a specified period, usually up to 30 years.

Coverage

VGLI offers coverage amounts ranging from $10,000 to $500,000, which can be adjusted if your needs change. The coverage amount is based on your previous SGLI policy, and you can increase your coverage by $25,000 every 5 years until you turn 60.

Term life insurance policies in the civilian market can provide coverage amounts ranging into the millions, offering more flexibility to meet your needs.

Medical Exams

VGLI does not require a medical exam if you enroll within 240 days of leaving the military. There are no health questions, lab tests, or life insurance medical exams during this period.

Term life insurance policies in the civilian market may or may not require a medical exam, depending on the insurer and your health status.

Conversion to Permanent Coverage

VGLI offers only term life insurance, which means it has a death benefit but does not build any cash value. However, you can convert your VGLI policy to a commercial (civilian) permanent life insurance policy at any time, without providing proof of good health.

Term life insurance policies in the civilian market may offer the option to convert to permanent coverage, such as whole life insurance, which provides a death benefit and also builds cash value over time.

Fees

VGLI has no membership or enrollment fees, similar to many group life insurance programs offered by private employers.

Term life insurance policies in the civilian market may or may not charge enrollment or membership fees, depending on the insurer.

Payout

The VGLI death benefit stays the same unless you request a change, and the policy remains in force as long as premiums are paid. It also has an accelerated death benefit feature, allowing you to access part of the payout if you become terminally ill.

Term life insurance policies in the civilian market typically have similar features, with a guaranteed death benefit and the option to access a portion of the benefit if diagnosed with a terminal illness.

In summary, VGLI can be a convenient option for veterans who want to continue their life insurance coverage after leaving the military, especially if they have medical conditions or are smokers. However, it may not be the most cost-effective solution for older veterans, and the coverage amounts are relatively low compared to civilian term life insurance policies. Civilian term life insurance policies may offer more flexibility in terms of coverage amounts, premium rates, and the option to convert to permanent coverage.

Converting VGLI to a commercial policy

Yes, you can convert your VGLI policy into a commercial (civilian) policy at any time. Here are the steps to convert your VGLI policy:

• Choose a new insurance company from the list of participating companies.
• Apply at the local sales office of your chosen company.
• Obtain a letter from the Office of Servicemembers' Group Life Insurance (OSGLI) confirming that you have VGLI coverage (called a VGLI Conversion Notice) and provide this letter to the agent who takes your application.

It is important to note that the conversion policy must be a permanent policy, such as a whole life policy. You cannot convert to other types of policies, like term, variable life, or universal life insurance. Additionally, supplementary policy benefits, like Accidental Death and Dismemberment or Waiver of Premium for Disability, are not considered part of the conversion policy.

When deciding whether to convert your VGLI policy to a commercial policy, there are several factors to consider. One advantage of VGLI is that if you apply within 240 days of leaving active duty service, you will not be required to take a physical or make a statement of health. Additionally, if you apply for VGLI directly after leaving the service within the 120-day window, VGLI premium rates are only based on age, not health, gender, smoker status, or other factors. Therefore, if you have health factors that may affect your life insurance eligibility, VGLI may be a good option.

However, there are also disadvantages to converting to VGLI. The maximum amount of life insurance coverage you can convert to VGLI is limited to the maximum amount of coverage you had under SGLI. Additionally, VGLI life insurance premiums can be more expensive, especially for young and healthy individuals. VGLI premiums can also become very expensive as you age. Therefore, it is recommended to shop around and compare life insurance premiums before making a decision.

Frequently asked questions