Service-Connected Disability And Term Life Insurance: What's The Verdict?

Veterans with service-connected disabilities can get life insurance through the US Department of Veteran Affairs. The Service-Disabled Veterans Life Insurance (S-DVI) program offers low-cost coverage to eligible service members. However, S-DVI stopped accepting new applications after December 31, 2022, and was replaced by the Veterans Affairs Life Insurance (VALife) program on January 1, 2023. VALife provides guaranteed acceptance whole life insurance of up to $40,000 to veterans with service-connected disabilities aged 80 and under.

Veterans Affairs Life Insurance (VALife)

Eligibility for VALife

Veterans aged 80 or younger with a VA service-connected disability rating are eligible for VALife, even if their rating is 0%. There is no time limit to apply after getting a disability rating.

Veterans aged 81 or older may be eligible for VALife if they meet the following requirements:

• Before turning 81 years old, they applied for VA disability compensation for a service-connected disability.
• After turning 81, they received a rating for the same disability.
• They apply for VALife within two years of getting notification of their disability rating.

Benefits of VALife

VALife offers the following benefits:

• Up to $40,000 in whole life insurance coverage in $10,000 increments.
• Cash value that starts to accumulate two years after the application is approved.
• The option to keep the coverage for the rest of the veteran's life.
• No need to prove good health to be eligible.

Cost of VALife

The cost of VALife, or the premium, depends on the veteran's age when they apply and the amount of coverage they want. The premium rate will never increase as long as the VALife policy is kept.

Applying for VALife

Veterans can check their eligibility and apply for VALife online. They will need to submit their first premium payment when applying.

Alternatives to VALife

If a veteran cannot qualify for traditional life insurance coverage, there are alternative options available, such as guaranteed issue life insurance, group or supplemental life insurance, and funeral and burial insurance.

Service-Disabled Veterans Life Insurance (S-DVI)

Under specific circumstances, the basic S-DVI policy offers a premium waiver for veterans who are totally disabled. However, if you have supplemental S-DVI coverage, you are still required to pay the premiums even if you have a waiver for your basic S-DVI premiums. It is important to note that the supplemental S-DVI program also stopped accepting new applications after the same deadline of December 31, 2022.

If you are an existing S-DVI policyholder, you have two options:

• Apply for VALife by December 31, 2025: You can maintain your S-DVI coverage during the 2-year waiting period for VALife benefits. Once your full VALife coverage begins, your S-DVI policy, including any premium waivers, will be terminated. During the waiting period, you must pay premiums for both policies.
• Keep your existing S-DVI policy: If you choose to do nothing, your current coverage will remain in place.

It is important to note that VALife does not offer premium waivers. Therefore, if you have a waiver for your S-DVI premiums, it will not be transferred to your VALife policy.

Servicemembers' Group Life Insurance (SGLI)

SGLI provides coverage of up to $500,000, with the option to choose the desired level of coverage. The current basic premium rate is 6 cents per $1,000 of insurance coverage, which includes an additional $1 per month for Traumatic Injury Protection (TSGLI). For example, for $500,000 of coverage, the monthly premium is $30, with $1 for TSGLI, totalling a monthly deduction of $31.

SGLI offers a range of benefits, including 120 days of free coverage from the date of leaving military service, which can be extended for up to 2 years if the individual is totally disabled. It also provides part-time coverage for Reserve members who do not qualify for full-time coverage. Service members can apply for Veterans' Group Life Insurance (VGLI) within 1 year and 120 days of discharge, up to the amount of their previous SGLI coverage.

To manage SGLI coverage, service members can utilise the SGLI Online Enrollment System (SOES) to make changes to their level of coverage, beneficiaries, and other details.

Veterans' Group Life Insurance (VGLI)

• Part-time Servicemembers' Group Life Insurance (SGLI) membership in the National Guard or Reserve, with an injury or disability incurred while on duty that disqualifies them from standard premium insurance rates.
• SGLI coverage while in the military, with separation from active duty for no longer than a year and 120 days.
• Release or retirement from the Ready Reserve or National Guard within the last year and 120 days.
• Assignment to the Individual Ready Reserve (IRR) or Inactive National Guard (ING) within the last year and 120 days. This includes members of the United States Public Health Service Inactive Reserve Corps (IRC).
• Placement on the Temporary Disability Retirement List (TDRL) within the last year and 120 days.

Under VGLI, veterans can receive term life insurance benefits ranging from $10,000 to $500,000, depending on their previous SGLI coverage. They can also increase their coverage by $25,000 every five years up to $500,000 until they turn 60. Applications for VGLI must be submitted within a year and 120 days of leaving the military, with proof of good health only required after the initial 240-day period. VGLI policies can be converted into commercial (civilian) policies at standard premium rates without health assessments.

Beneficiaries can be chosen and updated as needed, and VGLI offers a range of monthly premium rates based on age and coverage amount. Additionally, VGLI provides the option to reinstate expired policies and access certain benefits for those who become totally disabled or terminally ill.

Traumatic Injury Protection (TSGLI)

To be eligible for TSGLI benefits, individuals must meet the following criteria:

• Have a scheduled loss that is a direct result of the traumatic injury.
• Have suffered the traumatic injury before midnight on the day of leaving military service.
• Have incurred a scheduled loss within 2 years (730 days) of the traumatic injury.
• Have survived for a period of at least 7 full days from the date of the traumatic injury.
• Have been on active duty, a reservist, a National Guard member, on funeral honours duty, or on 1-day muster duty.

The types of injuries covered by TSGLI include limb reconstruction surgeries, inpatient hospital care at critical care facilities, rehabilitation facilities, and skilled nursing facilities. It also covers therapeutic passes, which help individuals transition from an inpatient facility to living at home.

TSGLI provides a benefit of $25,000 to $100,000 in short-term financial support for eligible service members. To receive these benefits, individuals need to apply by filling out the Application for TSGLI Benefits (SGLV 8600) and submitting it to the VA via fax, email, or mail. The premium for TSGLI is a flat rate of $1 per month for most service members and is automatically deducted from their base pay.

In summary, TSGLI offers financial assistance to service members who have suffered traumatic injuries, helping them with their recovery expenses. The benefit amount ranges from $25,000 to $100,000, and individuals can apply for it by submitting the required application form to the VA.

Frequently asked questions