Vgli Life Insurance: Can You Sell Your Policy?

Veterans' Group Life Insurance (VGLI) is a type of insurance offered to former members of the military. It allows them to keep their term insurance for life as long as they continue to pay the premiums. VGLI is a continuation of the Servicemembers' Group Life Insurance (SGLI) coverage offered to active military personnel. This means that to qualify for VGLI, one must have had SGLI coverage at the time of discharge. VGLI offers several benefits, such as guaranteed acceptance, no medical exam, and a payout that stays the same. However, the premiums increase with age, and VGLI offers only term life insurance with relatively low coverage amounts. As a result, some veterans may find that alternative insurance options provide better value.

VGLI eligibility criteria

Veterans' Group Life Insurance (VGLI) is a life insurance program that allows service members to continue their life insurance coverage after leaving the military. To be eligible for VGLI, an individual must meet at least one of the following criteria:

• The person 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 them for standard premium insurance rates.
• The person had SGLI while in the military and is within 1 year and 120 days of being released from an active-duty period of 31 or more days.
• The person is within 1 year and 120 days of retiring or being released from the Ready Reserve or National Guard.
• The person is within 1 year and 120 days of assignment to the Individual Ready Reserve (IRR) of a branch of service or the Inactive National Guard (ING). This includes members of the United States Public Health Service Inactive Reserve Corps (IRC).
• The person is within 1 year and 120 days of being put on the Temporary Disability Retirement List (TDRL).

Additionally, to qualify for VGLI, one must have had SGLI coverage during their active service. It is important to note that the VGLI coverage amount cannot exceed the SGLI coverage at the time of separation.

Spouses of service members who are losing SGLI coverage due to their spouse's separation or termination of SGLI may also be eligible for VGLI.

VGLI is a valuable option for those who cannot medically qualify for regular life insurance, as it guarantees coverage without medical underwriting if applied for within the specified timeframe. However, if an individual is in good health, a civilian term life insurance policy may offer better value.

VGLI premiums

The monthly premiums for VGLI are substantially higher than those for SGLI. In 2024, at age 65, $500,000 of coverage that costs $31 per month for those on active duty costs about $700 per month for veterans.

You can get VGLI coverage in $10,000 increments from $10,000 to $500,000. The lowest prices are offered to applicants younger than 30, with rates increasing every five years until age 80, when they top out.

You can still keep coverage after 80, and the price stops increasing based on age.

If you can medically qualify, there may be cheaper alternatives to VGLI. For example, an AAFMAA Level Term II policy can save you thousands of dollars in premiums over the life of the policy.

VGLI also offers a discount if you pay annually instead of monthly.

VGLI vs. term life insurance

When considering whether to obtain coverage under Veterans' Group Life Insurance (VGLI) or opt for term life insurance, it's important to evaluate your specific needs and circumstances. Here's a detailed comparison between VGLI and term life insurance to help you make an informed decision:

VGLI Overview:

VGLI is a type of group term life insurance designed specifically for former members of the military. It allows them to continue their Servicemembers' Group Life Insurance (SGLI) coverage after leaving the military as long as they pay the required premiums. The eligibility criteria for VGLI include having SGLI coverage during active service and applying within one year and 120 days of separation from service. VGLI offers death benefits ranging from $10,000 to $500,000, which can be adjusted based on the individual's needs.

Term Life Insurance Overview:

Term life insurance is a type of life insurance that provides coverage for a specified term or period. It is typically more affordable than permanent life insurance and is often chosen by individuals seeking temporary coverage. Term life insurance policies do not build cash value over time, but they offer a death benefit that remains constant throughout the policy's duration.

Premiums and Affordability:

• VGLI premiums are based on age and the amount of coverage, increasing as the insured person ages. For older veterans, VGLI rates can become high compared to standard term life insurance rates.
• Term life insurance premiums are generally fixed for the duration of the policy and may offer lower rates than VGLI, especially for healthy individuals.

Medical Requirements:

• VGLI does not require a medical exam or health questions if enrollment occurs within 240 days of leaving military service. It also doesn't factor in physical or mental health conditions, making it a good option for those with pre-existing conditions.
• Term life insurance typically requires a medical exam and considers health status when determining eligibility and premiums.

Coverage Amounts:

• VGLI offers a relatively low death benefit cap of $500,000. To obtain a higher payout, individuals may need to explore additional coverage options.
• Term life insurance policies can offer higher coverage amounts, with some providing coverage into the millions.

Flexibility:

• VGLI offers the convenience of guaranteed acceptance for eligible veterans and the ability to adjust coverage amounts.
• Term life insurance provides flexibility in terms of coverage duration and the option to choose between level term policies (fixed rates) and decreasing term policies (decreasing coverage over time).

Policy Options:

• VGLI only offers term life insurance, and converting it to an individual permanent life policy is possible but limited to specific companies.
• Term life insurance is widely available from various insurance providers, offering a range of policy options, including level term and decreasing term policies.

In summary, VGLI can be a good choice for veterans, especially those with pre-existing medical conditions, who want guaranteed acceptance and the ability to continue their SGLI coverage. On the other hand, term life insurance may offer more affordable rates, higher coverage amounts, and the flexibility to choose from different policy options. It is important to carefully consider your personal circumstances, health status, and financial needs when deciding between VGLI and term life insurance.

VGLI vs. whole life insurance

Veterans' Group Life Insurance (VGLI) is a type of group term life insurance offered to former members of the military. It allows service members to convert their Servicemembers' Group Life Insurance (SGLI) coverage to term life insurance that is renewable every five years.

VGLI

VGLI offers death benefits ranging from $10,000 to $500,000, which can be adjusted if the insured's needs change. VGLI premiums increase as the insured ages. For example, a $100,000 policy might cost $12 a month at age 35, but $60 a month at age 55.

To be eligible for VGLI, you must have had SGLI coverage at the time of discharge. You can sign up for continuous VGLI coverage within one year and 120 days of separation from service if you meet one of the following criteria:

• You've been released from active duty.
• You've been placed on the Temporary Disability Retirement List (TDRL).
• You've separated, retired, or been released from the Ready Reserve or National Guard.
• You were injured or disabled during active part-time service in the National Guard or Reserves.
• You've been assigned to the Individual Ready Reserve (IRR) or the Inactive National Guard (ING), including the United States Public Health Service Inactive Reserve Corps (IRC).

Whole Life Insurance

Whole life insurance is a type of permanent life insurance that combines a death benefit with a savings component, known as cash value. The cash value grows over time and can be accessed by the policyholder while they are still alive. Whole life insurance policies typically have level premiums, meaning the premiums remain the same throughout the life of the policy.

VGLI and whole life insurance are both types of life insurance that offer a death benefit. However, they have several key differences:

• Coverage Amounts: VGLI has a maximum death benefit of $500,000, while whole life insurance policies can provide coverage for much higher amounts.
• Premiums: VGLI premiums increase as the insured ages, while whole life insurance premiums typically remain level. This means that VGLI can become expensive in later years, especially when compared to whole life insurance policies.
• Cash Value: VGLI does not build any cash value, whereas whole life insurance includes a savings component that can be accessed by the policyholder.
• Conversion Options: VGLI can be converted to a whole life insurance policy, but it cannot be converted to other types of policies, such as term, variable, or universal life insurance.
• Eligibility: VGLI is specifically designed for former members of the military and has eligibility requirements related to military service. Whole life insurance is generally available to the public without the same eligibility restrictions.

VGLI alternatives

Veterans Group Life Insurance (VGLI) is a great option for those who are unable to medically qualify for regular life insurance. However, if you can medically qualify, there are some alternatives to VGLI that can offer better value. Here are some options to consider:

AAFMAA Level Term II Policy

An AAFMAA Level Term II policy can save you thousands of dollars in premiums over the life of the policy. AAFMAA offers term life insurance and whole life insurance, specifically for veterans, with coverage available nationwide. They also offer no medical exam life insurance policies, including ANNUITYLife and Wealth Builder Life, which are designed for older veterans and their spouses. You can get a quote on their website and compare the rates with VGLI to see the difference.

Corebridge Financial

Corebridge Financial offers competitive rates and a great choice of level term lengths. They have a high maximum issue age of 80 and their accelerated death benefit rider requirement is more flexible than that of many competitors.

Pacific Life

Pacific Life offers low rates and top-notch coverage features. They have a high maximum coverage amount of over $10 million and their policy is guaranteed renewable until the age of 95.

Protective

Protective is notable for its low rates and superior choices of level term lengths. They offer level term lengths of 35 and 40 years, while 30 years is typically the maximum length among competitors. Their policy can be renewed until the age of 95.

Symetra

Symetra had the lowest average term life insurance rates in a Forbes Advisor analysis, making it a top option for term life shoppers. Their maximum issue age of 60 for 10-year term life is lower than that of many competitors, but their rates are highly competitive.

Banner Life/Legal & General America

Banner Life offers long level term lengths of 35 or 40 years and coverage amounts up to $65 million, which is higher than most other insurers. Their term life insurance rates are also very competitive.

Midland National

Midland National's Premier Term policy includes ample living benefits. Policyholders can access an accelerated death benefit after a diagnosis of a terminal, chronic, or critical illness. Their rates are very competitive and often lower than policies without these living benefits.

Penn Mutual

Penn Mutual offers great term life insurance rates across a variety of term lengths and coverage amounts. They have excellent rates for older buyers, but their basic term life policy cannot be converted to permanent life insurance in the future.

SBLI

SBLI has a low level of customer complaints compared to competitors and they offer a 25-year term option that is not typically found. They have a superior AM Best financial strength rating (A+), which means buyers can be confident in the company's ability to pay claims.

Transamerica

Transamerica's Trendsetter Super policy is a good choice for older buyers, with excellent rates for healthy buyers in their 50s. Their maximum issue age is 80, which is higher than that of many competitors. Their policy can be converted to permanent life insurance until the age of 75.

Nationwide

Nationwide's YourLife GLT has no maximum death benefit as long as the company considers it reasonable for your age, income, and life stage. They have a superior AM Best financial strength rating (A+) and a low customer complaint ratio.

Frequently asked questions