Life Insurance And Va Loans: What You Need To Know

Veterans in the United States have access to several life insurance options, including Veterans' Mortgage Life Insurance (VMLI), Veterans Affairs Life Insurance (VALife), and Veterans' Group Life Insurance (VGLI). VMLI offers mortgage protection insurance to families of veterans with severe service-connected disabilities who have adapted their homes to accommodate their needs. VALife provides low-cost coverage to veterans with service-connected disabilities, while VGLI allows veterans to convert their Servicemembers' Group Life Insurance (SGLI) to a civilian program of lifetime renewable term coverage after separation from service. SGLI is a low-cost group term life insurance program for active-duty service members and can be extended for up to two years if the member is totally disabled upon separation. These programs provide financial security and peace of mind for veterans and their loved ones.

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. It is designed to help veterans who have service-connected disabilities and have received a Specially Adapted Housing (SAH) grant to adapt their homes to their needs.

To be eligible for VMLI, veterans must meet the following requirements:

• Have a severe disability that has been concluded to be caused or worsened by their military service.
• Have received an SAH grant to buy, build, or modify a home to live more independently (e.g., installing ramps or widening doorways).
• Hold the title to the home.
• Have a mortgage on the home.
• Be 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 coverage amount equals the outstanding mortgage balance 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 down. If the mortgage is fully paid off, the VMLI coverage will terminate. Additionally, VMLI does not offer any loan or cash value, nor does it pay dividends.

To apply for VMLI, veterans must first apply for an SAH grant. If approved for the grant, a loan guaranty agent will inform them of their eligibility for VMLI. The agent will then assist the veteran in completing the Veterans' Mortgage Life Insurance Statement (VA Form 29-8636). It is important to note that VMLI must be applied for before the veteran's 70th birthday.

The cost of VMLI premiums is determined by several factors, including the current mortgage balance, the remaining number of mortgage payments, and the desired amount of VMLI coverage. A VMLI Premium Calculator is available to help veterans estimate their potential premium.

If a veteran moves, refinances, or makes other changes to their mortgage, they must notify the Department of Veterans Affairs Regional Office and Insurance Center. Additionally, VMLI coverage applies only to the veteran's primary residence.

Veterans Affairs Life Insurance (VALife)

Eligibility for VALife

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 be eligible for VALife if you meet the following requirements:

• Before you turned 81 years old, 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 2 years of getting notification of your disability rating.

Benefits of VALife

VALife offers the following benefits:

• Up to $40,000 in whole life insurance coverage (in $10,000 increments)
• Cash value that starts to accumulate 2 years after your application is approved
• Your premium rate will never increase as long as you keep your VALife policy
• You won't need to prove you're in good health to be eligible
• You can keep your coverage for the rest of your life

Cost of VALife

The cost of VALife depends on your age when you apply and the amount of coverage you want. If more than 6 months have passed since your last birthday, you will be considered 1 year older when determining your premium rate. For example, if you are 59 years and 6 months and 1 day old, you will pay the rate for age 60.

Applying for VALife

You can check your eligibility and apply for VALife online. When you apply, you will need to submit your first premium payment.

When your VALife benefits will start

Your full life insurance coverage starts 2 years after you apply. You must pay the premiums during those 2 years. If you die during the 2-year waiting period, your beneficiaries will receive the total amount you paid in premiums, plus interest. If you die after the 2-year waiting period, your beneficiaries will receive the full coverage amount of your policy.

Servicemembers' Group Life Insurance (SGLI)

You can always make changes to the amount of your SGLI coverage or change your beneficiary (the person who gets the money if you die) by using the SGLI Online Enrollment System (SOES), which is available on the Defense Manpower Data Center website. You can reduce the insurance by $50,000 increments or cancel it entirely.

SGLI costs 6 cents per $1,000 of coverage. All SGLI participants must pay a $1 monthly charge for Traumatic Injury Protection (TSGLI), bringing the monthly premium to $31 for $500,000 worth of coverage. TSGLI provides protection against loss due to traumatic injuries and is designed to provide financial assistance to members so their loved ones can be with them during their recovery from their injuries. The coverage ranges from $25,000 to $100,000 depending on the nature of the injury.

When you leave the military, your SGLI will stay in effect for 120 days after your discharge. After you get out, you can convert your SGLI to Veterans' Group Life Insurance (VGLI), a similar program, if you wish.

Family members are also eligible for coverage under the Family Servicemembers' Group Life Insurance (FSGLI). Non-military spouses are covered automatically for $100,000 or the amount of the member's coverage, whichever is less. Military spouses must apply for the coverage. Premiums for spouse coverage are based on the spouse's age and amount of coverage. Dependent children are covered for $10,000 each at no cost to the member.

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 while on duty that disqualified you for 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 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) or 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).

Benefits of VGLI

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

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, you won't need to prove you're in good health. After the 240-day period, you must submit evidence of good health. You can apply through the Office of Servicemembers' Group Life Insurance (OSGLI) using the Prudential website or by mail/fax.

VGLI Premium Rates

VGLI premium rates depend on your age and the desired coverage amount. As of April 1, 2021, the monthly premium rates for different coverage amounts ranged from $1.00 to $380.00.

Beneficiaries

You can choose your beneficiaries and modify them as needed. You can update your beneficiary information by accessing your policy online or by filling out a VGLI Beneficiary Designation form (SGLV 8721).

Converting VGLI Policy

You can convert your VGLI policy into a commercial (civilian) policy at any time without providing proof of good health. The conversion policy must be a permanent policy, such as whole life insurance, and cannot be term, variable, or universal life insurance.

Service-Disabled Veterans Life Insurance (S-DVI)

The premium, or the amount you pay for your coverage, depends on the amount of insurance you have, the coverage plan you requested, and whether you pay monthly or annually. In some cases, S-DVI provides a premium waiver for veterans who are totally disabled. However, if you have supplemental S-DVI coverage, you will need to pay premiums even with a waiver for basic S-DVI premiums.

If you are an S-DVI policyholder, you have the option to apply for the new program, Veterans Affairs Life Insurance (VALife), which began accepting applications on January 1, 2023, for veterans with service-connected disabilities. VALife offers guaranteed acceptance whole life insurance, meaning that if you meet the eligibility requirements, your application will be automatically approved without the need to prove good health, and you can retain your coverage for life.

If you apply for VALife before December 31, 2025, you can maintain your S-DVI coverage during the 2-year waiting period for VALife benefits. However, if you apply on or after January 1, 2026, your S-DVI coverage will end upon approval of your VALife application, and you will only have VALife coverage during the waiting period. It is important to note that VALife does not offer premium waivers, so any waivers you have for S-DVI will not transfer to VALife.

Frequently asked questions