Veterans' Life Insurance: Cashing In On Policies

Life insurance is a crucial financial safety net for military personnel and their families. The US government offers various life insurance options for active service members and veterans, including the Servicemembers' Group Life Insurance (SGLI) and Veterans' Group Life Insurance (VGLI) plans, which provide affordable coverage of up to $400,000. While SGLI is automatically provided to active-duty service members, VGLI is available to those who had SGLI coverage during their service. Additionally, the VA offers five types of permanent life insurance policies, and veterans with service-connected disabilities can benefit from the VALife program, providing up to $40,000 in whole life insurance coverage. These policies can offer financial security and peace of mind for veterans and their loved ones.

Veterans' Group Life Insurance (VGLI)

Veterans Group Life Insurance (VGLI) is a type of life insurance offered by the US government that provides coverage for both active-duty and reserve service veterans. VGLI is available to those who had Servicemembers' Group Life Insurance (SGLI) when they were on active duty.

Eligibility

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

• You had part-time SGLI as a member of the National Guard or Reserve and suffered an injury or disability while on duty that disqualified you from 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) or 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).

Benefits

With VGLI, you can receive between $10,000 and $500,000 in term life insurance benefits, depending on your SGLI coverage 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 provide proof of good health. However, if you apply after this period, you must submit evidence of good health. You can apply through the Office of Servicemembers' Group Life Insurance (OSGLI) using the Prudential website or by mail or 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.

Beneficiaries

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 a VGLI Beneficiary Designation form.

Conversion to Commercial Policy

You can convert your VGLI policy into a commercial (civilian) policy at any time without providing proof of good health. The conversion policy must be a permanent policy, such as a whole life policy, and you can apply at the local sales office of your chosen company.

Service-Disabled Veterans Insurance (S-DVI)

Service-Disabled Veterans Life Insurance (S-DVI) is a program that provides low-cost coverage to eligible service members. The Department of Veterans Affairs stopped accepting new applications for S-DVI after December 31, 2022, but beneficiaries who already had the plan were allowed to keep it.

Veterans who are granted a service-connected disability rating but are otherwise in good health may apply to the VA for up to $10,000 in life insurance coverage at standard insurance rates. They must apply within two years of the date the VA notifies them of their service-connected disability. The premium (the amount paid for coverage) depends on the amount of insurance, the coverage plan, and whether payment is made monthly or annually.

Veterans who are totally disabled can get a waiver on the monthly premiums. For those eligible for this waiver, an additional policy of up to $30,000 is available, although premiums on this additional insurance cannot be waived. Veterans who are eligible for the premium waiver and under 65 years of age can get this additional policy by applying within a year of the approved waiver.

Gratuitous Service-Disabled Veterans Insurance (S-DVI) is granted posthumously to veterans who met the basic eligibility requirements but did not apply due to continued mental incompetence caused by a service-connected disability. The VA must receive an application for payment within two years of the veteran's death. If the person making the claim is mentally or legally incompetent, the VA can accept the application within a year of the incompetency ending.

National Service Life Insurance (NSLI)

The National Service Life Insurance (NSLI) program was created on October 8, 1940, to manage the insurance needs of World War II service personnel. Over 22 million NSLI policies were issued from 1940 until the program was closed to new issues on April 25, 1951. Policies were issued under a variety of permanent plans and as renewable term insurance.

Today, there are just over 67,880 policies still in force, with annual dividends paid on them. The maximum face amount of a policy is $10,000, excluding paid-up additional insurance, which can be purchased with the annual dividends. Certain disability benefits are available under these policies for policyholders who become totally disabled before their 65th birthday.

NSLI "V" term policies can be renewed indefinitely, but at older ages, premium rates increase significantly. While term policyholders were encouraged to convert to a permanent plan of insurance (which has fixed premium rates), many retained their term coverage. As a result, as term policyholders reached their sixties and seventies, they found it difficult to pay the high premium rates. This issue received significant Congressional attention as policyholders petitioned their representatives for financial relief.

In 1984, the Insurance Actuarial Staff addressed this problem by "capping" premium rates at the age 70 rate. This means that a term policyholder's premium will never increase over the age 70 premium rate. Effective September 11, 2000, "capped" NSLI term policies receive a termination dividend if a policy lapses or if the policyholder voluntarily cancels their policy. This termination dividend is used to purchase paid-up additional whole life insurance.

Under the authority of 38 U.S.C. 1901-1929, the Department of Veterans Affairs (VA) administers four distinct life insurance programs: National Service Life Insurance (NSLI), Veterans' Special Life Insurance (VSLI), Veterans' Reopened Insurance (VRI), and Service-Disabled Veterans' Insurance (S-DVI). As of January 31, 2021, these programs provided insurance coverage under 458,424 policies owned by veterans.

Veterans' Special Life Insurance (VSLI)

Veterans Special Life Insurance (VSLI) was a program established by the Insurance Act of 1951 to meet the insurance needs of Korean War service personnel and veterans. During this period, all active-duty service members were covered by $10,000 of free insurance under a program known as Servicemen's Indemnity. They remained covered under Servicemen's Indemnity for 120 days after their discharge. After this period, newly discharged veterans could apply for VSLI, which was renewable term insurance. The VSLI program was closed to new issues at the end of 1956.

Effective January 1, 1959, VSLI term policies could be converted to permanent insurance plans or exchanged for a limited convertible term policy. Today, there are 51,331 policies still in force, and annual dividends are paid on these policies. The maximum face amount of a policy is $10,000, which does not include paid-up additional insurance that can be purchased with the annual dividends. Certain disability benefits are available under these policies for policyholders who become totally disabled before their 65th birthday.

In addition to VSLI, the VA offers several other life insurance options, including Servicemembers' Group Life Insurance (SGLI) and Veterans' Group Life Insurance (VGLI). SGLI offers low-cost term coverage to eligible active-duty service members, while VGLI is available to those who had SGLI when they were on active duty. VGLI insures both active-duty and reserve service veterans.

It is important to note that the information provided here may not be exhaustive and may be subject to change. For the most up-to-date and accurate information regarding Veterans Special Life Insurance (VSLI) and other VA life insurance programs, it is recommended to refer to the official websites and resources of the Department of Veterans Affairs and other relevant government organizations.

Veterans Reopened Insurance (VRI)

Veterans' Reopened Insurance (VRI) is a type of life insurance offered by the US government as part of the Veterans Affairs (VA) life insurance program. This program provides financial security for veterans, service members, and their spouses and dependent children.

In 1964, Congress enacted legislation that provided for a limited one-year reopening of the National Service Life Insurance (NSLI) and the Veterans Special Life Insurance (VSLI) programs. From May 1, 1965, to May 2, 1966, disabled veterans who had been eligible to obtain NSLI or VSLI between 1940 and 1956 could once again apply for government life insurance. This coverage was available only to disabled veterans, and approximately 228,000 policies were issued. Today, there are only around 2,853 Veterans Reopened Insurance policies in force.

Annual dividends are paid on VRI policies, and the maximum face amount of a policy is $10,000. This limit does not include paid-up additional insurance, which can be purchased with the dividends that are paid annually. Certain disability benefits are also available under these policies for policyholders who become totally disabled before their 65th birthday.

In addition to VRI, the VA offers several other life insurance options, including Servicemembers' Group Life Insurance (SGLI) and Veterans' Group Life Insurance (VGLI). SGLI is a program that provides automatic life insurance coverage for qualifying active-duty service members. VGLI, on the other hand, is available to veterans who had SGLI coverage while on active duty. VGLI insures both active-duty and reserve service veterans.

Frequently asked questions