Life Insurance And Va Benefits: What's The Connection?

Veterans Affairs Life Insurance (VALife) is a guaranteed acceptance whole life insurance program for service-connected veterans aged 80 and under. It provides up to $40,000 in coverage, with lower amounts available in $10,000 increments. The program began accepting applications on January 1, 2023, and offers low-cost coverage to veterans with service-connected disabilities. VALife is one of several insurance options offered by the Department of Veterans Affairs, including Servicemembers' Group Life Insurance (SGLI), Veterans' Group Life Insurance (VGLI), and Family Servicemembers' Group Life Insurance (FSGLI).

Veterans Affairs Life Insurance (VALife)

Eligibility

If you are aged 80 or younger, you are eligible for VALife if you have a VA service-connected disability rating, even if your rating is 0%. There is no time limit to apply after getting your disability rating.

If you are aged 81 or older, you may still be eligible for VALife if you meet the following requirements:

• Before you turned 81, you applied for VA disability compensation for a service-connected disability.
• After you turned 81, you received a rating for that same disability.
• You apply for VALife within two years of getting notification of your disability rating.

Benefits

VALife offers the following benefits:

• Up to $40,000 in whole life insurance coverage (in $10,000 increments)
• Cash value that starts to accumulate two years after your application is approved
• No loans are offered with VALife
• Guaranteed acceptance, meaning that if you meet the eligibility requirements, your application will be automatically approved. You won't need to prove you're in good health, and you can keep your coverage for life.

Premiums

Your premium will depend on your age when you apply and the amount of coverage you want. The premium rate will never increase as long as you keep your VALife policy. If more than six months have passed since your last birthday, you will be considered one year older when determining your premium rate. For example, if you are 59 years and six months old, you will pay the rate for a 60-year-old.

Applying for VALife

You can apply for VALife by accessing the VALife online application. An authorized power of attorney, legal guardian, or VA Fiduciary may apply on behalf of an incompetent Veteran. You will receive an application confirmation at the time your application is approved, and within 4-5 days, you can log into your online account and print a copy of your policy pages.

Cancelling VALife

If you cancel your policy within 31 days of enrolment, you will receive a full refund of the premiums paid. If you cancel your policy more than two years after enrolment, you can receive the cash value of your policy or use it for extended term insurance. If you cancel your coverage within the two-year waiting period, there will be no return of funds unless it is within the first 31 days of enrolment.

Impact on S-DVI

The law that created the VALife program stipulates that veterans cannot be insured under both Service-Disabled Veterans Life Insurance (S-DVI) and VALife beyond the initial two-year enrolment period in VALife. If you applied using the online application, you were informed that your S-DVI would terminate two years after enrolling in VALife. You have the option to keep your S-DVI coverage if you cancel your VALife coverage. However, if you enrol in VALife before January 1, 2026, you cannot keep both S-DVI and VALife beyond the initial two-year enrolment period. For those who enrol on or after January 1, 2026, S-DVI will terminate as soon as the VALife policy is approved.

Service-Disabled Veterans Life Insurance (S-DVI)

VALife is a guaranteed acceptance whole life insurance program for service-connected veterans aged 80 and under, offering coverage of up to $40,000. There is no time limit to apply after receiving a disability rating, and the coverage amount can be chosen in $10,000 increments. The premium, or the amount paid for the coverage, depends on factors such as the age of the veteran, the amount of insurance, and the coverage plan. The premium rate remains unchanged throughout the policy's duration.

If a policyholder applies for VALife before December 31, 2025, they can retain their S-DVI coverage during the 2-year waiting period for VALife benefits. However, they must pay premiums for both policies during this period. If the application is submitted on or after January 1, 2026, the S-DVI coverage will end upon approval of the VALife application, and only VALife premiums will be payable during the waiting period. It is important to note that VALife does not offer premium waivers or loans.

For those aged 81 or older, eligibility for VALife requires applying for VA disability compensation before turning 81 and receiving a rating for the same disability after turning 81. Additionally, the application for VALife must be submitted within 2 years of receiving the disability rating notification.

Veterans' Group Life Insurance (VGLI)

Eligibility for VGLI

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 that disqualified you for standard premium insurance rates while on duty (including direct travel to and from duty).
• 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) 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).

VGLI Benefits

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

Applying for VGLI

To apply for VGLI, you must do so within 1 year and 120 days of leaving the military. If you sign up within 240 days of leaving the military, you won't need to prove you're in good health. However, if you sign up after this 240-day period, you will need to submit evidence of good health. You can apply for VGLI in one of the following ways:

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

VGLI 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 as of April 1, 2021, on the official website.

Choosing and Updating Beneficiaries

You can choose your beneficiaries and change them as needed. To update your beneficiary information, you can access your policy online through the Prudential Life Insurance Company of America or fill out a VGLI Beneficiary Designation form (SGLV 8721) and mail it to the provided address.

Converting VGLI Policy to a Commercial Policy

You can convert your VGLI policy into a commercial (civilian) policy at any time. You will be able to convert at standard premium rates without having to provide proof of good health. To convert your policy, choose a new insurance company from the list of participating companies and apply at their local sales office. You will need to provide a VGLI Conversion Notice letter from OSGLI to the agent who takes your application. It is important to note that the conversion policy must be a permanent policy, such as a whole life policy, and you cannot convert to term, variable life, or universal life insurance.

Servicemembers' Group Life Insurance (SGLI)

SGLI coverage can be extended for up to two years if the service member is totally disabled at separation. Coverage is also available for spouses and dependent children of service members with SGLI coverage.

Service members with full-time SGLI coverage should use the SGLI Online Enrollment System (SOES) to designate beneficiaries, or reduce, decline or restore SGLI coverage. Members with part-time coverage or no access to SOES should use SGLV 8286 to make changes to SGLI.

Veterans' Mortgage Life Insurance (VMLI)

VMLI is a form of life insurance that pays off the remainder of a veteran's mortgage in the event of their death. This ensures that their family does not face the burden of mortgage payments on top of the loss of the veteran's income. The maximum coverage provided by VMLI is $200,000, with the exact amount depending on the outstanding mortgage balance at the time of the veteran's death. This coverage is available for as long as the veteran remains current on their mortgage payments and eligible for the benefit.

VMLI premiums are based on the veteran's age at the time of enrollment and are locked in at that rate for the duration of the policy. The cost of the premium is automatically deducted from the veteran's VA disability compensation or military retirement pay each month. If a veteran's disability compensation is less than the monthly premium, they can pay the remaining amount by direct billing or through an allotment from their military retirement pay.

VMLI policies do not build cash value over time, and thus do not offer loans. Additionally, veterans cannot borrow against their VMLI policy. If a veteran cancels their VMLI policy within 12 months of enrollment, they will receive a refund of all premiums paid. However, if they cancel after 12 months, they will not receive a refund.

To apply for VMLI, veterans can complete and submit VA Form 29-8636, Application for Veterans' Mortgage Life Insurance.

Frequently asked questions