When you were a member of the armed forces, you may have received life insurance through a government program, Servicemembers' Group Life Insurance (SGLI). But this coverage ends after you leave active duty, so if you want to continue your life insurance protection, you'll need a new policy.
Fortunately, there are special life insurance programs for veterans available through both the government and private companies. Here's a basic comparison to help you figure out the right fit for your needs.
Life Insurance for Veterans
Veterans are eligible for life insurance through the United States Department of Veterans Affairs (VA), using the Veterans' Group Life Insurance program (VGLI). You can sign up for this program anytime within a year and 120 days following your date of separation from the military.
There's no medical exam if you sign up within 240 days, so you can qualify even if you have medical issues. Past 240 days, the VA may deny coverage for health issues, so it's important to sign up quickly.
Once you have VGLI coverage, you may be able to switch your policy to a private insurer. This could make sense if you find a better option outside the government.
Aside from the VA program, life insurance for veterans is mostly the same as for other civilians. Some companies offer special military discounts or only accept veterans for their plans. But otherwise, you'll go through the same application process and buy the same policies as someone who didn't serve in the military.
VGLI vs. Private Insurance
When it comes to choosing between VGLI and private insurance, there are a few considerations to keep in mind. First, VGLI policies accept all applicants who sign up by the deadline. Private insurers may have health exams and your coverage could be denied.
VGLI polices also do not increase prices for people who smoke or have medical issues. This is an advantage if you have a health issue or disability because you may have to pay a higher premium if you have private insurance. But if you're healthy, you may be able to find a lower rate in the private market.
Second, the VA doesn't offer permanent insurance. VGLI is a type of term policy, meaning it will eventually expire. If you sign up for VGLI only, your coverage will eventually end when you're older, at which point starting a new policy could be more expensive. The monthly VGLI premium payments also increase over time based on your age. With private insurance, you might be able to lock in the same price for longer or buy a policy that keeps the same premium payments for life.
Some private life insurance policies also include cash value as an extra benefit, which is money you can take and spend while you're alive. VA policies do not build cash value.
Considering Insurance Options
Since you can set up VGLI immediately after you leave the military (and with no health exam if within the stated time frame), it may be a good idea to start with this type of insurance while you evaluate your goals and overall financial plan. That way, you stay insured during the VGLI term and won't have to worry about being denied coverage for medical reasons.
Then you can have a discussion with a financial representative to see what might be the best fit for you. You may decide to purchase some term insurance through the VA and another type of policy with a private insurer. Once enrolled in VGLI, you have the opportunity to increase your coverage by $25,000 every five years up to the legislated maximum of $400,000 until age 60.
Life Insurance for Spouses & Children
Your spouse and any dependent children may also have received life insurance from the government (through the Family Servicemembers' Group Life Insurance program) while you were on active duty. They will not be able to continue their coverage through the VA after you leave the armed forces, however.
Your spouse will have 120 days to convert their government policy to a private life insurance policy without a required medical exam. Your dependent children, though, won't be able to convert. You'll need to buy them a new policy if you want to continue their life insurance coverage. When insurers offer special promotions for veterans, however, they sometimes extend them to the veterans' spouses and children.
Consider taking advantage of the benefits offered by government or private insurance, while helping to keep your protection up-to-date as you transition to civilian life.
