What are the life insurance options for veterans?
When you were an active duty servicemember you were automatically eligible for up to $400,000 of life insurance coverage through Servicemembers’ Group Life Insurance (SGLI). And you might be wondering if there are similar options now that your active duty is over.
The answer is yes. Life insurance for veterans and life insurance for disabled veterans are both available.
Let’s look at the options.
Does the Department of Veterans Affairs offer life insurance?
Yes, it does. If you took advantage of the life insurance offered to you through Servicemembers’ Group Life Insurance while you were an active servicemember or a member of the reserves, you are eligible for Veterans Group Life Insurance (VGLI) at the same benefits level. In other words, if your coverage was $400,000 then, you can continue that level of coverage as a veteran. As long as you are an eligible veteran, you cannot be turned down for VGLI, even if you have physical or mental health issues.
VGLI is a term life insurance policy, which means it covers you for a set period of time (or term) and then ends. If you die during that term, the people you chose as your beneficiaries will receive the death benefit, a payout in the amount of the coverage you selected. Here are two things to keep in mind about all term life policies: they may be more affordable than whole life insurance when you are young, but become more expensive as you get older; also, they do not build cash value over time, so, unlike whole life, you cannot borrow money from them.
One important benefit of a VGLI veteran’s life insurance policy is that you may be eligible for early benefits from the policy if you (or your spouse) become terminally ill. Utilizing this benefit requires a signed doctor’s statement that you (or your spouse) have nine months or less to live.
Other life insurance options for veterans
Is VGLI term life insurance the best life insurance for veterans? That depends on a few things—the ages of your children and other dependents, whether the maximum $400,000 payout would be enough to help protect your family’s future, and how much money you can afford to pay monthly for life insurance.
If you think you need more life insurance protection than a basic VGLI term life policy offers, you have several options. You can choose an individual term life insurance policy (with a payout greater than that the $400,000 maximum of a VGLI policy) from another insurance company. You can add coverage to your VGLI policy. Or you can convert your term life policy to whole life policy.
Let’s talk about the add-ons first.
- Accidental death and dismemberment (AD&D*): This policy pays a death benefit (in addition to the money from your term life policy) if your family loses you to a covered accident.
- Burial insurance: This add-on coverage pays a small benefit to cover the expenses of burial, cremation, or funeral services, which can cost as much as $10,000 or more.
Whole life insurance for veterans
You can also convert your VGLI term life insurance to whole life insurance. Whole life does what the name says. It covers you permanently, for your whole life, no matter how long you live. VGLI lets you convert your term life to whole life without taking a physical exam. (Although sometimes you will be asked to answer a few health questions.) In addition to being permanent, whole life builds cash value, so that that if you keep it long enough you have the opportunity to borrow money from the policy.
To convert your VGLI group life policy into an individual whole life insurance policy, start by contacting a participating life insurance company.
Special life insurance for disabled veterans
- Service-Disabled Veterans Life Insurance S-DVI): If you have a service-connected disability, you may be eligible for this policy, with benefits up to $10,000. Under certain conditions, the basic S-DVI policy will waive (eliminate) premiums due to total disability, and you can apply for additional (supplemental) coverage of up to $30,000.
- Veterans Mortgage Life Insurance (VMLI): Severely disabled veterans may also be eligible for this insurance, which provides money to cover home mortgages up to $200,000 for veterans who receive Specially-Adapted Housing grants because of disabilities brought on during their service.
To find out if you are eligible for either (or both) of these coverages, contact your local U.S. Department of Veterans Affairs office.
The death gratuity
Families of veterans who pass away 120 days or less after discharge are eligible for a tax-free death benefit of $100,000 to cover final expenses and cope with the hardship of their loss.