Life Insurance After Military Service: What's Covered?

Life insurance is a crucial aspect of financial planning, especially for those serving in the military or transitioning to civilian life. When it comes to life insurance options for military personnel, there are several paths to consider. One option is the Servicemember's Group Life Insurance (SGLI) program, which offers low-cost term coverage to active-duty members of the military. SGLI provides valuable protection, but it's important to note that it isn't permanent and only lasts for 120 days after leaving the service. To bridge this gap, veterans can consider converting their SGLI to Veterans' Group Life Insurance (VGLI), which offers renewable term coverage. Alternatively, they may opt for a commercial life insurance policy, although this may prove more expensive. Understanding the intricacies of these options is essential for making informed decisions about life insurance after military service.

Servicemembers' Group Life Insurance (SGLI)

Eligibility

To qualify for SGLI, you must be:

• An active-duty member of the Army, Navy, Air Force, Space Force, Marines, or Coast Guard
• A commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS)
• A cadet or midshipman of a U.S. military academy
• A member, cadet, or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises
• 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
• A volunteer in an Individual Ready Reserve (IRR) mobilization category

ROTC members who do not qualify for full-time coverage may be eligible for part-time coverage.

Coverage and Benefits

SGLI offers a maximum coverage of $500,000, with service members able to choose coverage amounts in $50,000 increments. All service members are automatically enrolled for the maximum coverage amount and pay a monthly premium of $31.00, which includes $1.00 for Traumatic Injury Protection (TSGLI) coverage. SGLI also allows service members to be eligible for TSGLI and Family Servicemembers Group Life Insurance (FSGLI). TSGLI provides additional coverage in the event of a traumatic injury, while FSGLI provides coverage for spouses (up to $100,000) and dependent children (up to $10,000). Spousal coverage ranges from $5.00 to $50.00 per month, depending on age, while dependent children are covered at no additional cost.

SGLI also provides several benefits upon leaving the military:

• 120 days of free coverage from the date of leaving the military
• Extension of free coverage for up to 2 years if the service member is totally disabled when they leave the military
• The option to convert SGLI coverage to Veterans' Group Life Insurance (VGLI) or an individual insurance policy within 120 days of discharge

Converting to VGLI or an Individual Policy

Upon leaving the military, service members have the option to convert their SGLI coverage to VGLI or an individual insurance policy. VGLI provides the ability to continue the same level of coverage without providing proof of good health, although premiums are higher and based on age. On the other hand, converting to an individual policy must be done within 120 days of discharge and requires converting to a permanent policy, such as whole life insurance, which can be more expensive.

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 is an option for those who have left the military and are seeking to continue their life insurance coverage. VGLI is available to all service members leaving active duty.

To be eligible for VGLI, you must apply within 1 year and 120 days of being discharged from active duty, and you must have had Servicemembers' Group Life Insurance (SGLI) while you were in the military. If you had part-time SGLI coverage, you may still be eligible for VGLI if you suffered an injury or disability that disqualifies you from standard premium insurance rates.

With VGLI, you can get between $10,000 and $500,000 in term life insurance benefits, based on how much SGLI coverage you had 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. VGLI premium rates are based on your age and the amount of insurance coverage you want.

If you sign up for VGLI within 240 days of leaving the military, you won't need to prove you're in good health. After this period, you will need to submit evidence of good health.

VGLI is a renewable term insurance, which means that the rates go up every 5 years. This can become cost-prohibitive as you age, so it may be worth considering other options as well.

Service-Disabled Veterans' Insurance (S-DVI)

Service-Disabled Veterans Insurance (S-DVI) is a life insurance coverage program offered by the Department of Veterans Affairs (VA) to veterans with a service-connected disability. This program provides permanent and term life insurance plans with a maximum face value of $10,000.

To be eligible for S-DVI, veterans must meet the following criteria:

• Released from active duty without a dishonorable discharge on or after April 25, 1951.
• Rated for a service-connected disability
• Good health status, with the exception of service-related conditions
• Application within two years of receiving your disability rating

It is important to note that the S-DVI program stopped accepting new applications after December 31, 2022. However, if you already have S-DVI, you can choose to keep it or apply for the new Veterans Affairs Life Insurance (VALife) program. VALife is available to veterans with service-connected disabilities and offers similar benefits to S-DVI.

The cost of S-DVI premiums depends on factors such as the amount of insurance coverage, the coverage plan, and whether payments are made monthly or annually. Veterans who are totally disabled may be eligible for a waiver of the monthly premiums. Additionally, those who qualify for the premium waiver can obtain an additional policy of up to $30,000 if they pay the premiums.

S-DVI provides valuable financial protection for veterans with service-connected disabilities, ensuring that their loved ones are taken care of in the event of their death.

Veterans' Mortgage Life Insurance (VMLI)

• Have a severe disability that is caused or worsened by their military service.
• Have received a Specially Adapted Housing (SAH) grant to modify their home to live more independently (e.g., installing ramps or widening doorways).
• Hold the title of the home.
• Have a mortgage on the home.
• Be under 70 years old.

VMLI offers 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. VMLI is a decreasing-term insurance, meaning that coverage ends once the mortgage is fully paid off. The premium for VMLI is based on the current mortgage balance, the remaining number of mortgage payments, and the required coverage amount.

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 the 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.

Traumatic Injury Protection (TSGLI)

TSGLI benefits have been expanded to include limb reconstruction surgeries, inpatient hospital care at critical care facilities, rehabilitation facilities, and skilled nursing facilities, as well as care to help transition from an inpatient facility to living at home (therapeutic pass).

To be eligible for TSGLI, you must meet the following requirements:

• Be insured by Servicemembers' Group Life Insurance (SGLI) when you experience a traumatic injury.
• Incur a scheduled loss that is a direct result of the traumatic injury.
• Suffer the traumatic injury before midnight on the day you left the military.
• Suffer a scheduled loss within 2 years (730 days) of the traumatic injury.
• Survive for a period of at least 7 full days from the date of the traumatic injury.

The premium for TSGLI is a flat rate of $1 per month for most service members. To receive TSGLI payments, you will need to apply using the Application for TSGLI Benefits (SGLV 8600).

Frequently asked questions