Free Life Insurance: A Military Benefit?

Life insurance is a crucial aspect of financial planning, especially for those serving in the military. The US military offers free life insurance to its service members through the Servicemembers' Group Life Insurance (SGLI) program, underwritten by Prudential. This insurance provides coverage of up to $500,000, with the option to determine the specific amount in $50,000 increments. SGLI is a valuable benefit as it guarantees coverage at a flat rate of 6 cents per $1,000 in coverage, without the need for an underwriting process. However, SGLI may not be sufficient for everyone, especially those with families or other financial commitments.

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

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

Benefits

SGLI offers several benefits, including:

• Coverage up to a maximum of $500,000, in $50,000 increments.
• 120 days of free coverage from the date you leave the military, with the option to convert your SGLI to Veterans' Group Life Insurance (VGLI).
• 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.

Costs

The current basic SGLI premium rate is 6 cents per $1,000 of insurance coverage, which includes an additional $1 per month for Traumatic Injury Protection coverage (TSGLI). For example, for $500,000 of coverage, the monthly premium is $31.

Managing your benefits

You can manage your SGLI benefits through the SGLI Online Enrollment System (SOES). Through SOES, you can choose your level of coverage, select your beneficiaries, and make any necessary changes.

Veterans' Group Life Insurance (VGLI)

Veterans Group Life Insurance (VGLI) is a group life insurance policy offered by the U.S. Department of Veterans Affairs (VA) to veterans. VGLI allows former service members to maintain their life insurance coverage after leaving the military, provided they continue to pay the premiums. The amount of coverage provided by VGLI ranges from $10,000 to $500,000 in term life insurance benefits, based on the individual's Servicemembers' Group Life Insurance (SGLI) coverage while they were in the military.

To be eligible for VGLI, individuals must meet at least one of the following requirements:

• Have had part-time SGLI as a member of the National Guard or Reserve and suffered an injury or disability that disqualified them from standard premium insurance rates while on duty, including direct travel to and from duty.
• Have had SGLI while in the military and be within 1 year and 120 days of being released from an active-duty period of 31 or more days.
• Be within 1 year and 120 days of retiring or being released from the Ready Reserve or National Guard.
• Be within 1 year and 120 days of assignment to the Individual Ready Reserve (IRR) or Inactive National Guard (ING). This includes members of the United States Public Health Service Inactive Reserve Corps (IRC).
• Be within 1 year and 120 days of being placed on the Temporary Disability Retirement List (TDRL).

Individuals can apply for VGLI within 1 year and 120 days of leaving the military. If they apply within 240 days, they are not required to provide proof of good health; otherwise, they must submit evidence of being in good health. The application can be made online or by mail/fax.

VGLI premium rates are determined by the applicant's age and desired coverage amount. Policyholders can increase their coverage by $25,000 every 5 years, up to a maximum of $500,000, until they turn 60. Additionally, VGLI policies can be converted into commercial (civilian) policies at standard premium rates without requiring health status verification.

VGLI provides flexibility in choosing and updating beneficiaries, and it covers both active-duty and reserve service veterans.

Traumatic Injury Protection (TSGLI)

Servicemembers' Group Life Insurance Traumatic Injury Protection (TSGLI) is an insurance program administered by the Department of Veterans Affairs. It provides short-term financial support to help eligible service members recover from severe injuries. TSGLI is not only for combat injuries but covers injuries incurred on or off duty.

TSGLI benefits were expanded on April 14, 2023, 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 file a claim for TSGLI benefits, you need to fill out and submit the Application for TSGLI Benefits (SGLV 8600). If your claim is denied, you can appeal the decision by filling out the TSGLI Appeal Request Form (SGLV 8600A).

Service-Disabled Veterans' Insurance (S-DVI)

Service-Disabled Veterans Life Insurance (S-DVI) is a life insurance coverage option offered by the Department of Veterans Affairs (VA) to veterans with a service-connected disability. The S-DVI program stopped accepting new applications after December 31, 2022, but existing beneficiaries can retain their coverage. The VA introduced a new program called Veterans Affairs Life Insurance (VALife) for veterans with service-connected disabilities, with applications being accepted from January 1, 2023.

Eligibility Criteria for S-DVI:

To be eligible for an S-DVI policy, an individual 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, excluding any service-related conditions.
• Application submitted within two years of receiving the disability rating.

S-DVI Premium Rates:

The premium rates for S-DVI plans are based on the amount of insurance coverage, the chosen coverage plan, and the payment frequency (monthly or annually). Veterans who are totally disabled may be eligible for a waiver of the basic S-DVI policy premiums. However, if they have supplemental S-DVI coverage, they must pay the premiums for this additional insurance.

Transitioning from S-DVI to VALife:

Individuals with S-DVI coverage have two options: they can either apply for VALife or choose to retain their existing S-DVI policy. If they apply for VALife before December 31, 2025, they can keep their S-DVI coverage during the two-year waiting period for VALife benefits. However, they must pay premiums for both policies during this period. If the application for VALife 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 two-year waiting period.

Veterans' Mortgage Life Insurance (VMLI)

Veterans Mortgage Life Insurance (VMLI) is a program that provides insurance coverage on home mortgages to eligible, severely disabled veterans. To be eligible, veterans must meet the following requirements:

• They have a severe disability caused or worsened by their service.
• They received a Specially Adapted Housing (SAH) grant to buy, build, or make changes to a home to accommodate their needs.
• They have the title of the home.
• They have a mortgage on the home.
• They are under 70 years old.

VMLI provides up to $200,000 in mortgage life insurance, which is paid directly to the bank or lender that holds the mortgage. The amount of coverage equals the amount still owed on the mortgage but does not exceed $200,000. It is important to note that VMLI is a decreasing-term insurance, meaning that the coverage amount decreases as the mortgage balance is paid off. If the mortgage is fully paid off, the VMLI coverage will end. Additionally, VMLI does not have any loan or cash value, and it does not pay dividends.

The VMLI premium is based on several factors, including the current balance of the mortgage loan, the remaining number of mortgage payments, and the amount of VMLI coverage needed. The home covered by VMLI must be the primary residence, and any changes to the mortgage, such as transferring to another lender or refinancing, must be communicated to the Department of Veterans Affairs.

VMLI is a valuable program that provides financial protection for eligible disabled veterans and their families, ensuring that their homes are secure even in the event of their passing.

Frequently asked questions