Life Insurance After Military Service: What's Covered?

Life insurance is a crucial aspect of financial planning, especially for those with families and dependents. While the military offers Servicemembers' Group Life Insurance (SGLI) coverage, it may not be sufficient for everyone. Military personnel can opt for additional life insurance to ensure their families are financially secure in the event of their death or disability. SGLI provides low-cost term coverage of up to $400,000 or $500,000, depending on the source, to eligible service members, and they can also pay extra to include their spouses. However, this insurance coverage may not be enough, especially for those with young children or significant financial commitments like mortgages. When leaving the military, service members have the option to convert their SGLI to Veterans' Group Life Insurance (VGLI) or a commercial policy, but the VGLI term insurance can become costly as one ages. Therefore, it is recommended to start planning for life insurance at least two months before separating from the military and to consult with a financial advisor to ensure adequate coverage.

Servicemembers' Group Life Insurance (SGLI)

The SGLI program is not limited to full-time coverage. Part-time coverage is available for Reserve members who don't qualify for full-time coverage. The cost of SGLI is 6 cents per $1,000 of coverage, with an additional $1 monthly charge for Traumatic Injury Protection (TSGLI), which provides coverage for traumatic injuries. This brings the monthly premium to $31 for $500,000 worth of coverage.

SGLI participants can always make changes to their coverage amount or beneficiary information using the SGLI Online Enrollment System (SOES). Coverage can be reduced in $50,000 increments or cancelled entirely. It's important to note that SGLI coverage will only stay in effect for 120 days after discharge from the military. However, if a servicemember is totally disabled at the time of separation, their coverage can be extended for up to 2 years.

After leaving the military, individuals have the option to convert their SGLI policy to Veterans' Group Life Insurance (VGLI), which provides similar coverage. To be eligible for VGLI, individuals must apply within 1 year and 120 days of being released from active duty or retiring/being released from the Ready Reserve, National Guard, or Individual Ready Reserve (IRR). Those who apply within 240 days of leaving the military are not required to provide proof of good health. VGLI premium rates are based on age and the desired amount of insurance coverage.

Veterans' Group Life Insurance (VGLI)

Veterans Group Life Insurance (VGLI) is a program that allows veterans of the US military to keep their life insurance coverage after leaving the military, provided they continue to pay the premiums. The amount of coverage offered by VGLI ranges from $10,000 to $500,000 in term life insurance benefits, which is based on the individual's Servicemembers' Group Life Insurance (SGLI) coverage amount when they left the military. It is important to note that VGLI is not an automatic benefit and must be applied for within 1 year and 120 days of discharge from the military.

Eligibility for VGLI is determined by meeting at least one of the following requirements:

• Part-time SGLI as a member of the National Guard or Reserve, and suffering an injury or disability while on duty that disqualifies the individual for standard premium insurance rates.
• Having SGLI while in the military and being within 1 year and 120 days of release from an active-duty period of 31 or more days.
• Being within 1 year and 120 days of retiring or being released from the Ready Reserve or National Guard.
• Being within 1 year and 120 days of assignment to the Individual Ready Reserve (IRR) or Inactive National Guard (ING), including members of the US Public Health Service Inactive Reserve Corps (IRC).
• Being within 1 year and 120 days of being placed on the Temporary Disability Retirement List (TDRL).

VGLI offers flexibility in choosing beneficiaries, allowing policyholders to select who will receive the money from their life insurance policy in the event of their death. Additionally, beneficiaries can be updated as needed. The policy can also be converted into a commercial (civilian) policy at any time, without providing proof of good health.

The cost of VGLI premiums depends on the age of the policyholder and the desired amount of insurance coverage. It is recommended to apply for VGLI within 240 days of leaving the military, as proof of good health is not required during this period. After the 240-day period, evidence of good health must be submitted for enrollment. Applications can be made through the Office of Servicemembers' Group Life Insurance (OSGLI) online or by mail/fax using the appropriate forms.

Eligibility requirements for VGLI

Veterans' Group Life Insurance (VGLI) is a term policy for ex-members of the military that allows them to continue the group coverage they had while in active service. VGLI offers $10,000 to $400,000 in life insurance benefits, based on the amount of coverage the veteran had upon leaving the military.

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).

It's important to note that you have one year and 120 days from the date you leave the service to apply for VGLI. 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'll need to submit evidence of good health.

Converting SGLI to a commercial policy

Servicemembers' Group Life Insurance (SGLI) is a low-cost term coverage insurance option for eligible service members. Military veterans can transfer their SGLI to a similar low-cost group life insurance program called Veterans' Group Life Insurance (VGLI).

Converting SGLI to a commercial (civilian) policy is possible at any time. Here are the steps to make the conversion:

• Timing: SGLI policyholders have up to 120 days from their separation from the military to convert their coverage to a commercial policy.
• Choosing a Provider: Select an insurance provider from the list of participating companies.
• Application: Apply at the local sales office of your chosen company.
• Documentation: Provide the agent with a copy of your separation document (Form DD-214 or NGB-22) or written Reservist orders along with your last Leave & Earnings Statement (LES).
• Conversion Policy Type: The conversion policy must be a permanent policy, such as a whole life policy. Other types of policies, like term, variable, or universal life insurance, are not allowed.
• Standard Premium Rates: You can convert at standard premium rates without providing proof of good health.
• Supplementary Benefits: Supplementary policy benefits, like Accidental Death and Dismemberment or Waiver of Premium for Disability, are not included in the conversion policy.

SGLI to VGLI Conversion:

Alternatively, you can convert your SGLI to a VGLI policy. VGLI is a renewable term life insurance policy that offers coverage of up to $400,000. The process for converting to VGLI is similar to converting to a commercial policy, with a few key differences:

• Timing: You must apply to convert to VGLI within one year and 120 days from discharge. If you apply within 240 days of discharge, you don't need to submit evidence of good health. After 240 days, you will be required to answer questions about your health.
• Application Method: You can apply for the conversion to VGLI online using the VA's online application or via postal mail using form SGLV 8714.
• Cost Calculation: VGLI premiums vary based on age and are more expensive as the veteran ages.

Factors to Consider:

When deciding whether to convert to VGLI or a commercial policy, consider the following:

• Health Conditions: If you have a health condition that may affect your eligibility for a commercial policy, VGLI may be a better option, as it does not require a physical or health statement.
• Cost: VGLI premiums are based solely on age, while commercial policies consider other factors like health, gender, and smoking status. Shop around and compare quotes to find the most affordable option for your circumstances.
• Coverage Amount: The maximum VGLI coverage is limited to the maximum amount of your SGLI coverage. If you plan to convert to VGLI, consider increasing your SGLI coverage to the maximum limit allowed.

Remember to carefully review the terms, conditions, and costs associated with any insurance policy before making a decision.

Supplemental life insurance coverage

SGLI offers low-cost term coverage to eligible service members, with a maximum coverage of $400,000 to $500,000. However, some people may require additional coverage, and there are several options available to them.

One option is to convert SGLI to a five-year renewable term policy with Veterans' Group Life Insurance (VGLI) upon leaving the military. VGLI provides up to $400,000 in coverage and is available to all service members leaving active duty. Acceptance is guaranteed if coverage is elected within 120 days of leaving the service, and no proof of insurability is required during this period. VGLI can be an expensive option, especially as the policyholder gets older, so it may be worth comparing costs with other providers.

Another option is to purchase a life insurance policy from a commercial insurance company. This may be a more affordable option for those who are in good health. It is recommended to start shopping around at least two months before leaving the military, as it can take up to six weeks to get a new life insurance policy. It is important to not cancel SGLI until a new policy has been issued and the first premium paid.

When choosing a life insurance policy, it is essential to consider several factors. Firstly, the policy should include a "war clause," ensuring that benefits will be paid to your family if you die as a result of combat duty. Secondly, you should consider how much insurance you need and what you want it to cover. Some experts recommend buying a policy that is seven to ten times your income, but this may not be suitable for everyone. Discussing your specific situation with an insurance company or financial advisor can help you determine the right amount and type of insurance for your needs.

Finally, you should decide between term and permanent life insurance. Term insurance is valid for a specific period, such as 10 or 20 years, while permanent insurance lasts a lifetime and generally has a higher premium. Permanent insurance also builds cash value that can be borrowed against or withdrawn.

Frequently asked questions