Mobil Retirees: Life Insurance Options And You

Life insurance is a tricky topic, and it's understandable to wonder if you still need it once you've retired. The answer depends on your personal circumstances, such as family, finances, and debts. While it's common for retirees to stop paying premiums, there are valid reasons to keep a policy. For instance, if you have a child with special needs or a spouse whose income would be significantly impacted by your death, retaining life insurance is advisable. It's also worth considering if you have outstanding debts, including mortgages, or if you want to leave a fixed amount to your loved ones or cover estate taxes. On the other hand, if you're debt-free, have prepaid final expenses, and don't plan to leave a large inheritance, you likely don't need life insurance in retirement.

Eligibility for Veterans' Group Life Insurance (VGLI)

Veterans' Group Life Insurance (VGLI) is a life insurance program that allows service members to convert their Servicemembers' Group Life Insurance (SGLI) coverage to term life insurance that is renewable every five years. Members with full-time SGLI coverage are eligible for VGLI when they leave the service.

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 you suffered an injury or disability while on duty—including direct travel to and from 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).

You can get between $10,000 and $500,000 in term life insurance benefits through VGLI, based on how much SGLI coverage you had when you left the military. 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 won't need to prove you're in good health, but if you apply after this period, you will need to submit evidence of good health.

Applying for VGLI

Veterans’ Group Life Insurance (VGLI) allows you to keep your life insurance coverage after leaving the military as long as you continue to pay the premiums. To be eligible for 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 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 the Inactive National Guard (ING), including 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).

The benefits you receive through VGLI depend on the amount of SGLI coverage you had when you left the military. With VGLI, you can receive between $10,000 and $500,000 in term life insurance benefits. You can increase your coverage by $25,000 every 5 years, up to $500,000, until you turn 60.

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 won't need to prove you're in good health. However, if you apply after this 240-day period, you will need to submit evidence of good health.

You can apply for VGLI in one of two ways:

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

If you need to reinstate an expired VGLI policy, you will need to fill out the Application for Reinstatement of VGLI Coverage (SGLV 180).

Monthly premium rates

Age and Health:

Type of Policy:

The type of life insurance policy chosen also impacts monthly premium rates. For example, term life insurance provides coverage for a specified period, usually 10 to 30 years, and often has lower premiums during the initial term. However, when the term ends, the policyholder may have the option to renew at significantly higher premium rates. On the other hand, permanent life insurance policies, such as whole life or universal life insurance, offer lifelong coverage as long as premiums are paid. While these policies tend to have higher premiums, they may include a cash value component that can be accessed during the policyholder's lifetime.

Coverage Amount:

The desired coverage amount, or death benefit, also influences monthly premium rates. Higher coverage amounts will generally result in higher premiums. It is important for retirees to carefully consider their financial obligations, debts, and legacy goals when determining the appropriate coverage amount. Additionally, some life insurance policies may allow for an increase in coverage over time, which can be beneficial for retirees who anticipate changing needs.

Family and Financial Circumstances:

Retirees should evaluate their family and financial circumstances when considering monthly premium rates for life insurance. If a retiree has adult children who are financially independent and sufficient resources to cover retirement costs, the need for life insurance may be minimal, resulting in lower coverage amounts and premiums. However, if a retiree has a spouse or dependent relatives whose income relies on the retiree's support, maintaining a suitable level of coverage with corresponding premium payments may be necessary.

Estate Planning:

Life insurance can also be utilised as an estate planning tool for retirees with substantial assets or business interests. In such cases, the proceeds from a life insurance policy can assist heirs in paying estate taxes and ensuring a smooth transition of assets or business ownership. Retirees with complex estates may require specialised policies or consultations with estate planning experts to determine the appropriate coverage and associated monthly premium rates.

In conclusion, monthly premium rates for life insurance among retirees can vary significantly based on individual circumstances. It is essential to carefully assess one's age, health, financial obligations, family dynamics, and estate planning goals when determining the need for life insurance coverage and the corresponding premium payments. Consulting with a financial planner or insurance specialist can help retirees make informed decisions regarding their coverage needs and the associated costs.

Servicemembers' Group Life Insurance (SGLI)

Eligibility

To be eligible for full-time SGLI coverage, you must meet at least one of the following requirements:

• You are an active-duty member of the Army, Navy, Air Force, Space Force, Marines, or Coast Guard.
• You are a commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS).
• You are a cadet or midshipman of the U.S. military academies.
• You are a member, cadet, or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises.
• You are a member of the Ready Reserve or National Guard, assigned to a unit, and are scheduled to perform at least 12 periods of inactive training per year.
• You are a volunteer in an Individual Ready Reserve (IRR) mobilization category.

If you are in nonpay status with the Ready Reserve or National Guard, you may still be eligible for full-time SGLI coverage if you meet both of the following requirements:

• You are scheduled for 12 periods of inactive training for the year.
• You are drilling for points rather than pay.

Benefits

SGLI provides benefits such as:

• Coverage up to the top limit of $500,000, in $50,000 increments.
• 120 days of free coverage from the date you left the military.
• Extension of free coverage for up to 2 years (if you are totally disabled) when you leave the military.
• Part-time coverage if you are a Reserve member who doesn't qualify for full-time coverage.

Cost

If you have SGLI coverage, you will pay a monthly premium that will be automatically deducted from your base pay. The current basic SGLI premium rate is 6 cents per $1,000 of insurance coverage, including an additional $1 per month for Traumatic Injury Protection coverage (TSGLI). For example, if you have the maximum coverage of $500,000, your monthly premium will be $31 ($30 plus $1 for TSGLI).

Managing Your Benefits

You can choose your level of coverage or even refuse coverage altogether. You can also choose your beneficiaries and change them as needed. To make changes to your beneficiaries or coverage level, submit your updates through the SGLI Online Enrollment System (SOES).

Converting Your Coverage

When you leave the military, you have the option to convert your SGLI coverage to Veterans' Group Life Insurance (VGLI) or an individual insurance policy. You can apply for VGLI within 1 year and 120 days from your date of discharge for up to the amount of coverage you had through SGLI. To convert to an individual insurance policy, you must do so within 120 days from your date of discharge without proof of good health.

Eligibility for SGLI

To be eligible for Servicemembers' Group Life Insurance (SGLI), 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 that disqualified you for standard premium insurance rates while on duty, including direct travel to and from duty.
• You had SGLI while 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).

If you meet any of these criteria, you can apply for Veterans' Group Life Insurance (VGLI) to keep your life insurance coverage after leaving the military. The amount of coverage you can get through VGLI is based on your SGLI coverage amount 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.

Frequently asked questions