Military Life Insurance: Permanent Coverage For Service Members?

Life insurance is a crucial consideration for military members and their families, offering financial protection in the event of death or disability. The US military provides Servicemembers' Group Life Insurance (SGLI), a low-cost group life insurance program for active-duty service members, with a maximum coverage of $500,000. This insurance is provided by the Department of Veterans Affairs (VA) and underwritten by Prudential. SGLI offers benefits like the option to choose coverage amounts, change beneficiaries, and extend coverage for up to two years in case of total disability. However, SGLI may not be sufficient for everyone, especially those with families or other financial commitments. Military members can explore additional life insurance options from private insurers, considering factors like war clauses, coverage amounts, and the specific needs of their loved ones. Understanding the intricacies of life insurance is essential for military personnel to make informed decisions and ensure their families are adequately protected.

Servicemembers' Group Life Insurance (SGLI)

SGLI provides benefits such as:

• Coverage up to $500,000 in $50,000 increments.
• 120 days of free coverage from the date of discharge from the military.
• Extension of free coverage for up to 2 years if the member is totally disabled when they leave the military.
• Part-time coverage for reserve members who don't qualify for full-time coverage.

Service members can choose their level of coverage and beneficiaries, with the option to change these as needed. They can also refuse coverage completely.

SGLI also includes Servicemembers' Group Life Insurance Traumatic Injury Protection (TSGLI), which provides benefits to service members who experience certain losses during active duty, such as blindness or amputation. TSGLI is billed as part of the SGLI premium at a flat rate of $1 per month.

Upon leaving the military, service members can apply to convert their SGLI coverage to Veterans' Group Life Insurance (VGLI) within 1 year and 120 days from their date of discharge. They can also convert their coverage to a permanent, individual insurance policy within 120 days without proof of good health.

Veterans' Group Life Insurance (VGLI)

Veterans Group Life Insurance (VGLI) is a life insurance policy offered by the U.S. Department of Veterans Affairs (VA) to veterans who were previously covered by Servicemembers' Group Life Insurance (SGLI) while on active duty. VGLI provides an opportunity for eligible individuals to continue their life insurance coverage after leaving the military, as long as they pay the required premiums.

Eligibility for VGLI:

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

• Have had SGLI coverage while in the military and apply within 1 year and 120 days of being released from active duty.
• 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 U.S. Public Health Service Inactive Reserve Corps (IRC).
• Be within 1 year and 120 days of being placed on the Temporary Disability Retirement List (TDRL).
• Have had part-time SGLI coverage as a member of the National Guard or Reserve and suffered an injury or disability that disqualifies them from standard premium insurance rates.

VGLI Benefits:

VGLI provides term life insurance benefits ranging from $10,000 to $500,000. The benefit amount is based on the SGLI coverage held while in the military. If individuals had less than the maximum coverage, they can increase it by $25,000 a year after obtaining VGLI and then every 5 years until they turn 60 years old, up to a total of $500,000.

Applying for VGLI:

To apply for VGLI, individuals must do so within 1 year and 120 days of leaving the military. Applications made within 240 days of discharge do not require proof of good health, while those made after this period need to submit evidence of good health. Applications can be submitted online through the Office of Servicemembers' Group Life Insurance (OSGLI) or by mail/fax using the Application for Veterans' Group Life Insurance (SGLV 8714).

VGLI Premium Rates:

The premium rates for VGLI are based on the age of the applicant and the desired amount of insurance coverage. As of April 1, 2021, premium rates vary according to these factors.

Beneficiaries:

VGLI policyholders can choose their beneficiaries and make changes as needed. They can update their beneficiary information by accessing their policy online or by filling out and submitting a VGLI Beneficiary Designation form (SGLV 8721).

Converting VGLI Coverage:

VGLI coverage can be converted to an individual insurance policy by choosing a new insurance company and applying at their local sales office. A confirmation letter from OSGLI, known as a VGLI Conversion Notice, must be provided to the agent during the application process. It is important to note that the conversion policy must be a permanent policy, such as whole life insurance, and supplementary benefits are not included in the conversion.

Traumatic Injury Protection (TSGLI)

TSGLI provides financial assistance of $25,000 to $100,000 to aid in the recovery from a traumatic injury. This coverage is not limited to combat injuries but extends to injuries incurred on or off duty. To be eligible for TSGLI payments, individuals must meet specific requirements, including being insured by SGLI at the time of the injury, incurring a scheduled loss as a direct result of the traumatic injury, and surviving for a period of at least seven full days from the date of the injury.

The premium for TSGLI is a flat rate of $1 per month for most service members and is included in the SGLI premium. To receive TSGLI payments, individuals need to apply using the Application for TSGLI Benefits (SGLV 8600), which can be submitted via fax, email, or mail.

In April 2023, TSGLI benefits were expanded to include coverage for limb reconstruction surgeries, inpatient hospital care at critical care facilities, and therapeutic passes to aid in the transition from an inpatient facility to living at home.

Service-Disabled Veterans' Insurance (S-DVI)

Service-Disabled Veterans Insurance (S-DVI) is a life insurance coverage option for veterans with a service-connected disability. This program is offered by the Department of Veterans Affairs (VA) and provides permanent life insurance plans as well as term life insurance. The maximum coverage available through S-DVI is $10,000, with policies issued at standard insurance rates.

To be eligible for S-DVI, veterans 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 (even a 0% rating is acceptable).
• In good health, with the exception of any service-related health conditions.
• Application submitted within two years of receiving the disability rating from the VA.

Veterans who are totally disabled may be eligible for a waiver of the monthly premiums. If eligible for this waiver, an additional policy of up to $30,000 is available, although premiums for this supplemental coverage must be paid. To be eligible for the supplemental S-DVI, veterans must be under 65 years of age and apply within one year of the approved premium waiver.

It is important to note that the S-DVI program stopped accepting new applications after December 31, 2022. However, veterans who already had the plan were allowed to keep it. As an alternative, the VA introduced a new program called Veterans Affairs Life Insurance (VALife) in 2023, which is available to veterans with service-connected disabilities.

Veterans' Mortgage Life Insurance (VMLI)

Veterans Mortgage Life Insurance (VMLI) is a type of mortgage protection insurance offered by the US Department of Veterans Affairs. It is available to veterans with severe service-connected disabilities who have adapted their homes to suit their needs. The insurance covers mortgage payments up to $200,000, which is paid directly to the bank or lender in the event of the veteran's death. The coverage amount is determined by the outstanding mortgage balance and decreases as the loan is paid off.

To be eligible for VMLI, veterans must meet several requirements. Firstly, they must have a severe disability that the Department of Veterans Affairs recognises as being caused or worsened by their military service. Secondly, they must have received a Specially Adapted Housing (SAH) grant, which helps veterans buy, build, or modify a home to accommodate their disability. This may include installing ramps or widening doorways to improve accessibility. Thirdly, veterans must hold the title to their home and have a mortgage in their name. Lastly, they must be under 70 years of age.

The cost of VMLI premiums is based on the current mortgage balance, the remaining mortgage term, and the amount of coverage needed. The policy does not have any loan or cash value, nor does it pay dividends. Veterans interested in VMLI can use the VMLI Premium Calculator to estimate their potential premium.

It is important to note that VMLI is specifically designed to protect the veteran's family in the event of their death. Therefore, the insurance benefit is paid directly to the mortgage lender, not to a designated life insurance beneficiary. Additionally, VMLI coverage only applies to the veteran's primary residence and will cease if the mortgage is paid off or if the veteran moves, refinances, or makes significant changes to their mortgage.

Frequently asked questions