Life Insurance For Retired Colonels: Is It Necessary?

Life insurance is a crucial aspect of financial planning, providing peace of mind and security for individuals and their loved ones. For retired colonels, in particular, the question of life insurance coverage is essential to ensuring a stable future. While military service offers a range of benefits, understanding the specifics of life insurance options during retirement can be complex. This is especially true for retired colonels, whose unique circumstances may raise questions about eligibility, coverage limits, and the potential need to supplement military benefits with additional insurance policies. In this discussion, we will delve into the details of life insurance for retired colonels, exploring the available options, eligibility criteria, and the steps required to secure adequate coverage. By shedding light on these aspects, we aim to empower retired colonels and their families to make informed decisions about their financial future.

Eligibility for Veterans' Group Life Insurance (VGLI)

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 Servicemembers' Group Life Insurance (SGLI) as a member of the National Guard or Reserve, and you suffered an injury or disability while on 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).

If you meet any of these requirements, you can apply for VGLI 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; otherwise, you will need to submit evidence of good health.

VGLI coverage is issued in multiples of $10,000 up to a maximum of $500,000. The amount of coverage you can get depends on how much SGLI coverage you had when you left the military.

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 authorised 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) mobilisation category.

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

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

Benefits

SGLI offers benefits such as:

• Coverage up to a maximum of $500,000, in $50,000 increments.
• 120 days of free coverage from the date you leave 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, for a coverage amount of $500,000, the monthly premium rate is $30, with an additional $1 for TSGLI, making a total monthly premium deduction of $31.

Converting SGLI to VGLI or individual insurance

Life insurance is an important consideration for anyone, but especially for those who have served in the military. For retired colonels, there are options available to ensure financial security for themselves and their families. One option is to convert Servicemembers' Group Life Insurance (SGLI) to Veterans' Group Life Insurance (VGLI). Here is a detailed guide on how to do this:

• Timing: To convert SGLI to VGLI, you must do so within 1 year and 120 days of leaving the military. This timeframe is crucial, as it guarantees your ability to convert without medical underwriting.
• Eligibility: You may be eligible for VGLI if you 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 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 active duty 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 the specified timeframe of being assigned to the Individual Ready Reserve (IRR) or placed on the Temporary Disability Retirement List (TDRL).
• Benefits: With VGLI, you can get between $10,000 and $500,000 in term life insurance benefits, based on your previous SGLI coverage. You can increase your coverage by $25,000 every 5 years up to a maximum of $500,000 until you turn 60 years old.
• Application Process: You can apply for VGLI through the Office of Servicemembers' Group Life Insurance (OSGLI) using the Prudential website or by mail/fax. If you apply within 240 days of leaving the military, you won't need to prove you're in good health. After 240 days, you'll need to submit evidence of good health.
• Conversion to Individual Insurance: If you already have VGLI and want to convert it to an individual insurance policy, you can do so at any time. Choose a company from the list of participating companies, apply at their local sales office, and provide them with a VGLI Conversion Notice from OSGLI. The conversion policy must be a permanent policy, such as a whole life policy, and supplementary benefits are not included.

In summary, converting SGLI to VGLI or individual insurance provides retired colonels with continued financial security and peace of mind. By understanding the timing, eligibility, benefits, and application process, retired colonels can make informed decisions about their life insurance options.

SGLI Disability Extension

The SGLI Disability Extension is a form of life insurance coverage offered by the U.S. Department of Veterans Affairs. It is designed to provide continued financial protection for service members who are totally disabled at the time of their discharge from the military. This extension allows eligible individuals to retain their Servicemembers' Group Life Insurance (SGLI) coverage, which they had while in service, for up to two years after leaving the military, at no additional cost.

To qualify for the SGLI Disability Extension, a service member must meet the criteria for being considered totally disabled. This means that the individual must have a disability that renders them unable to be gainfully employed. Alternatively, they may qualify if they have one of the specified permanent disabilities, regardless of their employment status. These specified conditions include the permanent loss of use of both hands, both feet, or both eyes, as well as combinations of loss of use involving one hand, one foot, and/or one eye. Total loss of hearing in both ears and organic loss of speech also fall under the specified conditions.

The SGLI Disability Extension ensures that eligible service members can maintain their life insurance coverage during the critical period following their discharge from the military. This extension provides peace of mind and financial security for those who are unable to work due to their disabilities. By offering this benefit, the Department of Veterans Affairs recognises the sacrifices made by service members and provides them with continued support as they transition to civilian life.

To apply for the SGLI Disability Extension, individuals can download and complete the Application for SGLI Disability Extension (Form 8715). This form is available on the official website and can be viewed using Adobe Reader. It is important to note that the SGLI Disability Extension is just one aspect of the comprehensive support offered by the Department of Veterans Affairs to assist disabled veterans in managing their financial and medical needs.

Claiming insurance payment after death

Life insurance is an important financial safety net for many people, especially retired military personnel. In the unfortunate event of the policyholder's death, here is a guide on how to claim the insurance payment:

Step 1: Identify the Insurance Company

Firstly, you need to identify the insurance company with which the deceased had a policy. This information may be available in their personal records or financial documents. If you are unsure, the Association of British Insurers can provide assistance in tracing insurance policies.

Step 2: File a Claim

Once you have identified the insurance company, the next step is to file a claim. This is typically done by the beneficiary named on the policy. Contact the insurance company and follow their instructions on how to file the claim, which may involve submitting forms and documents online or by mail. The required documents typically include a copy of the death certificate, which can be obtained from the county, hospital, or nursing home where the death occurred.

Step 3: Insurance Company Review

After the claim has been filed, the insurance company will review the submitted documents, including the policy and the death certificate. If the policy was owned by a trust, they may also need to review the trust document to identify the owner and beneficiary. This review process allows them to verify the information and ensure that all requirements are met.

Step 4: Payout, Denial, or Further Information Request

Most states allow insurance companies 30 calendar days to review and make a decision on the claim. After this review period, they will notify the beneficiary of their decision. The insurance company may choose to pay out the claim, deny the claim, or request additional information. If the claim is approved, the beneficiary can expect to receive the payout within 30 to 60 days of filing the claim.

However, it is important to note that there can be delays in the payout for various reasons, including:

• Contestability clause: Insurance policies often include a one- to two-year contestability clause, which allows the company to investigate potential insurance fraud if the insured person passes away within the first two years of the policy.
• Suicide clause: Insurance companies typically include a suicide clause, enabling them to deny benefits if the policyholder dies by suicide within the first two years.
• Homicide investigation: If the death certificate lists homicide, the insurance company may withhold the payout until any applicable charges or allegations are cleared or dropped.
• Illegal activity: If the policyholder passed away while engaged in illegal activity, the payout may be delayed or denied.
• Misrepresentation: If the policyholder provided false information or omitted relevant details on their application, the insurance company may delay or deny the payout.

Additional Considerations:

It is important to note that there is generally no time limit on claiming life insurance benefits. Beneficiaries can claim their benefits at any time, even if it is long after the death of the policyholder. Additionally, life insurance benefits are typically exempt from income tax, but it is recommended to consult a tax advisor for specific situations.

Frequently asked questions