As you transition to civilian life, veterans may have questions regarding life insurance options available to them. Learn how you can understand them.
Term life policies differ from private whole life policies in that their coverage has time limitations and premiums that increase over time, becoming unaffordable at some point in your lifetime.
SGLI
SGLI, or Servicemembers’ Group Life Insurance online Election System (SOES), provides low-cost term coverage to service members and their dependents at low costs, as well as some funds to help with funeral costs after someone passes. Automatic for all active duty service members and typically deducted from paychecks automatically, you have the option to decline it if desired; your SOES (Servicemembers’ Group Life Insurance online Election System) via milConnect allows you to manage it effectively.
While SGLI may provide an excellent foundation to your financial plan, it often isn’t enough to meet all of the needs of your family after retiring from military service. Beyond final expenses, your family may have other financial goals like paying off debt, reducing mortgage balance or setting aside funds for college tuition for your children; that is why it’s crucial to find ways to supplement or replace SGLI coverage.
As soon as you leave the military, your SGLI policy expires and can either be converted to Veterans’ Group Life Insurance (VGLI) or purchased independently through private companies. It is wise to explore your options prior to leaving or retiring so you can make informed decisions for your financial future.
When electing VGLI upon discharge, their premium is determined by their age at discharge and increases every five years thereafter. For instance, someone selecting $500,000 of coverage at age 35 would pay $31 a month until reaching 55 when that cost increases to $700 monthly.
First Command Financial Advisors can assist in helping you determine the appropriate level of life insurance coverage for you and your situation. They understand both the unique challenges and opportunities associated with military careers as well as your specific goals, providing recommendations on life insurance solutions such as VGLI or personal policies that would suit them and their families best.
VGLI
As they transition out of military service, veterans have the option of keeping their Servicemembers Group Life Insurance (SGLI) as Veterans Group Life Insurance (VGLI), an affordable term policy covering $10k to $400k that doesn’t require a medical exam if purchased within one year and 120 days from their official date of separation from military duty.
VGLI coverage is open to anyone who has been separated or retired from active duty, active Reserve, National Guard or Ready Reserve services as well as those injured or disabled during military service. There is no waiting period and there are no health questions or medical exams required before applying – making this the perfect solution for veterans looking for affordable term coverage as well as those with pre-existing medical conditions that would make traditional private companies unsuitable.
However, veterans should recognize the limitations of VGLI before signing up. While initial premiums are low, they increase every five years compared to private life insurance and can quickly become prohibitively expensive for older veterans compared to alternative policies like term life insurance provided through private providers. Furthermore, VGLI only provides term life coverage, making it suitable for short-term needs but lacking comprehensive long-term or permanent solutions.
VALife program can also provide more permanent life insurance solutions for veterans who want more permanent coverage, with guaranteed acceptance whole life policies available for those disabled during service or who are terminally ill. While not available to all veterans, it could be an excellent solution if they cannot qualify for the Servicemembers Group Life Insurance Policy or suffer from health conditions making traditional private life insurance ineligible for coverage.
No matter your choice of insurance – be it SGLI, VGLI or private policy – First Command Financial Advisors are experts at understanding each option’s advantages and can assist in choosing what best fits for your situation. In addition, our Advisors possess extensive knowledge about military pay and benefits which may aid them when evaluating overall financial wellbeing.
VALife
VALife is a life insurance program specifically tailored for veterans aged 80 years or younger and having service-connected disability ratings between zero to 100%. Unlike SGLI and VGLI, it offers guaranteed acceptance whole life insurance without medical underwriting or monthly premiums; in addition, veterans no longer face time limits required by previous disability programs like S-DVI which required waiting two years before becoming insured.
Veterans interested in enrolling in VALife should complete a VA Application for Life Insurance available on eBenefits website, taking only minutes to complete. Most veterans should find this process straightforward enough that they can complete it themselves. VALife offers several advantages over traditional life insurance plans, including no upfront premium charge or future premium increases once a policy has been issued.
As well as SGLI and VALife policies, some veterans may also qualify for short-term financial protection through Traumatic Injury Protection (TSGLI) and long-term coverage through Dependency Indemnity Compensation (DIC), both designed to assist in covering costs related to trauma-induce injuries or the deaths of family members. Sometimes veterans can apply simultaneously for both policies; effectively obtaining life insurance from two sources simultaneously.
If a veteran is already covered by one of these programs, they can keep that coverage and add VALife as an add-on policy. Many veterans who are insured through VGLI choose VALife because it provides greater benefits at an earlier age compared to term life policies and can continue providing protection once their VGLI policy has expired.
The VALife program does not alter eligibility of those currently enrolled in S-DVI; those who have yet to apply will need to wait until 2023 before their full VALife coverage becomes effective. It does not alter any other VA-funded life insurance policies held by veterans – including policies with lump sum payouts or those which pay out after specific amounts of time have elapsed.
Private Insurance
Private health insurance refers to coverage purchased directly from a private insurer by individuals. This coverage can also be acquired through federal or state health insurance marketplaces (exchanges). Plans purchased outside the marketplaces or exchanges through direct contracts with an insurance provider also fall within this definition, though not VA or TRICARE coverage and similar programs provided by government bodies. Public health coverage as defined by the American Community Survey questionnaire includes Medicare and other medical assistance programs; CHIP; VA and CHAMPVA plans as well as individual state-specific plans. Beginning in 2018, an additional question was added to assess military healthcare coverage and use, providing more accurate determination of veteran coverage through TRICARE, CHAMPVA or any other military-sponsored health plans.
Normally, enrolling or making changes to private health coverage requires waiting until open enrollment period (OEP). However, if a qualifying life event arises outside of an OEP period, special enrollment periods may allow you to modify your plan outside the OEP window.