Va Government Life Insurance: Taxable Or Not?

Veterans Affairs Life Insurance (VALife) is a government life insurance program for veterans with service-connected disabilities. It offers low-cost, guaranteed acceptance whole life coverage of up to $40,000, with no time limit to apply after receiving a disability rating. While VALife premiums are locked in at the rate paid upon enrollment, they are not eligible for premium waivers. This means that veterans aged 80 or younger with a VA service-connected disability rating are eligible for VALife, even with a 0% rating.

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 SGLI while 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).
• 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 from standard premium insurance rates.

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. If you have less than the maximum coverage, you can increase your coverage by $25,000 per year after obtaining VGLI and then every 5 years until you turn 60 years old, up to a total of $500,000.

Applying for VGLI

To apply for VGLI, you must do so within 1 year and 120 days of leaving military service. If you apply within 240 days of leaving the military, you don't need to provide proof of good health. However, if you apply after this period, you must submit evidence of good health.

You can apply for VGLI through the Office of Servicemembers' Group Life Insurance (OSGLI) using the Prudential website or by mail/fax by filling out the Application for Veterans' Group Life Insurance (SGLV 8714).

VGLI Premium Rates

VGLI premium rates are determined by your age and the desired amount of insurance coverage. As of April 1, 2021, the monthly premium rates vary based on the coverage amount.

Choosing and Updating Beneficiaries

You can choose your beneficiaries and modify them as needed. To update your beneficiary information, you can access your policy online through the Prudential Life Insurance Company of America or by filling out and submitting the VGLI Beneficiary Designation form (SGLV 8721).

Converting VGLI Coverage to an Individual Policy

It is possible to convert your VGLI coverage to an individual insurance policy by selecting a participating insurance company, applying at their local sales office, and providing them with a VGLI Conversion Notice from OSGLI. The conversion policy must be a permanent policy, such as whole life insurance, and supplementary benefits like Accidental Death and Dismemberment or Waiver of Premium for Disability are not included in the conversion.

Servicemembers' Group Life Insurance (SGLI)

The SGLI Online Enrollment System (SOES) allows Servicemembers to manage their coverage and designate beneficiaries. Members with part-time coverage or without access to SOES should use form SGLV 8286 to make changes.

SGLI offers benefits such as coverage of up to $500,000 in $50,000 increments, 120 days of free coverage from the date of leaving military service, and part-time coverage for Reserve members who don't qualify for full-time coverage. The current basic SGLI premium rate is 6 cents per $1,000 of insurance coverage, with an additional $1 per month for Traumatic Injury Protection coverage (TSGLI). This means that for $500,000 of coverage, the monthly premium rate is $30, plus $1 for TSGLI, totaling a monthly deduction of $31.

Upon separation or retirement from military service, SGLI coverage can be converted to Veterans' Group Life Insurance (VGLI) within 1 year and 120 days from the date of discharge, retaining the same coverage amount. Alternatively, SGLI can be converted to a permanent, individual insurance policy within 120 days of discharge without proof of good health.

If a Servicemember is totally disabled at the time of discharge, they may be eligible for a free extension of their SGLI coverage for up to two years. To apply for this extension, they need to fill out the SGLI Disability Extension Application (SGLV 8715) and send it to the OSGLI address listed on the form.

Family Servicemembers' Group Life Insurance (FSGLI)

Eligibility

You may be eligible for FSGLI if you are the spouse or dependent child of a service member who meets one of the following requirements:

• The service member is on active duty and covered by full-time SGLI.
• The service member is a member of the National Guard or Ready Reserve covered by full-time SGLI.

You may qualify to get FSGLI as the spouse of someone with SGLI coverage, regardless of your own status (i.e. active duty, reserve, guard, retired, or civilian).

Coverage

FSGLI provides up to a maximum of $100,000 of coverage for spouses, not exceeding the service member's SGLI coverage, and $10,000 for each dependent child. Dependent children get free coverage.

Applying for Benefits

If you are the civilian spouse of a service member signed up for full-time SGLI, you will be automatically insured under FSGLI, and your premium will be deducted from your service member's pay.

If you are a military spouse married on or after January 2, 2013, you will not be automatically covered and will need your service member to sign you up online through the SGLI Online Enrollment System (SOES).

Premium Payments

The service member will pay a premium for spousal coverage, which will increase as the spouse ages. The premium will be automatically deducted from the service member's pay if the spouse is signed up in the Defense Enrollment Eligibility Reporting System (DEERS). If the spouse is not signed up in DEERS, the service member will still be responsible for premiums and back payments.

Changes to Coverage

The service member can reduce, turn down, or cancel spousal coverage by submitting changes online through SOES. Dependent coverage cannot be turned down, reduced, or cancelled, and cannot be converted to an individual insurance policy.

Extended Coverage for Dependent Children

Dependent coverage is provided at no cost until the child is 18 years old. Coverage may be extended if the child is a full-time student between 18 and 22 years old, or if the child becomes permanently and totally disabled before turning 18 and is no longer able to support themselves. In the latter case, coverage may be extended indefinitely.

Converting Spousal FSGLI Coverage to an Individual Insurance Policy

Spouses have the option to convert spousal FSGLI coverage to a permanent, individual insurance policy (e.g. whole life) within 120 days from the date of the service member's separation from the military, written election to end spousal SGLI coverage, or written election to end their SGLI coverage. After conversion, the spouse becomes solely responsible for all aspects of the policy, including premium payments.

Companies Participating in the Program

A list of companies participating in the program can be found on the official website.

Service-Disabled Veterans Life Insurance (S-DVI)

S-DVI stopped accepting new applications after December 31, 2022, but if you already have this insurance, you can keep it. The Veterans Affairs Life Insurance (VALife) program, which began accepting applications on January 1, 2023, is now available for veterans with service-connected disabilities.

The premium (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, a premium waiver is available for veterans who are totally disabled.

If you have S-DVI, you have two options:

• Apply for VALife by December 31, 2025, and keep your S-DVI during the 2-year waiting period for VALife benefits. Your S-DVI will end when your full VALife coverage starts, and you must pay premiums for both policies during the waiting period.
• Keep your S-DVI without applying for VALife.

Note that VALife does not offer premium waivers, so if you have a waiver for S-DVI premiums, it will not transfer to VALife.

Veterans' Mortgage Life Insurance (VMLI)

Veterans Mortgage Life Insurance (VMLI) is a form of mortgage protection insurance offered by the US Department of Veterans Affairs. It is available to veterans who have received a Specially Adapted Housing (SAH) grant and have a severe service-connected disability. The insurance is designed to provide financial security for the families of these veterans, who have adapted their homes to fit their needs.

To be eligible for VMLI, veterans must meet several requirements. Firstly, they must have a severe disability that the Department of Veterans Affairs determines was caused or worsened by their military service. Secondly, they must have received an SAH grant to buy, build, or modify a home to enable more independent living. This can include installing ramps or widening doorways. Thirdly, veterans must hold the title to the home and have a mortgage on it. Finally, applicants must be under 70 years old.

The benefits provided by VMLI include up to $200,000 in mortgage life insurance, which is paid directly to the bank or lender holding the mortgage. The coverage amount equals the outstanding mortgage balance but does not exceed $200,000. VMLI is a decreasing-term insurance policy, meaning that the coverage amount decreases as the mortgage balance is paid down. If the mortgage is fully paid off, the VMLI coverage ends. It is important to note that VMLI does not offer loan or cash value, nor does it pay dividends to policyholders.

To apply for VMLI, veterans must first apply for an SAH grant. If approved, the loan guaranty agent will inform them of their eligibility for VMLI. The agent will then assist the veteran in completing the necessary paperwork, including the Veterans' Mortgage Life Insurance Statement (VA Form 29-8636). It is important to note that veterans must apply for VMLI before their 70th birthday. The VMLI premium is calculated based on the current mortgage balance, the remaining number of mortgage payments, and the required VMLI coverage amount.

In summary, Veterans Mortgage Life Insurance (VMLI) is a valuable benefit offered by the Department of Veterans Affairs to veterans with severe service-connected disabilities. It provides financial protection for their families by helping to pay off their adapted homes in the event of the veteran's death.

Frequently asked questions