Best Life Insurance for Veterans
What is the best life insurance for veterans?
This is one of those questions which must be answered with another question. What is your reason for buying life insurance? If you want temporary coverage to protect against a specific risk such as paying off a mortgage or funding college for your children, term insurance would be your least expensive choice.
If you are trying to coordinate a retirement or estate plan where the life insurance needs to stay in place until you are in your 70's or older, term insurance will become much too expensive and you need to look to universal or whole life products. Veterans have many options to shop for life insurance including the government, military associations, and traditional insurance companies. Let's look at them one at a time.
What is Veterans' Group Life Insurance?
Veterans' Group Life Insurance, commonly referred to as VGLI, is a government sponsored group term life insurance program available to all veterans who were covered under Servicemembers' Group Life Insurance (SGLI) while they were on active duty. Once a veteran leaves active service, he or she has 120 days plus one year to convert to the VGLI coverage. At the end of the initial 120 period, the existing SGLI coverage automatically terminates. If the conversion is made in the first 120 days, your health condition does not matter. If the conversion is made during the next year following termination of SGLI, proof of health is required. Veterans can convert up to a maximum of $400,000 coverage to VGLI, but not more than the total coverage they held under SGLI. If you have any serious health issues upon leaving military active service, you should seriously consider converting to VGLI during the initial 120 day period.
Do VGLI premiums increase as you get older?
VGLI is a good program, but if you are healthy when you leave military service, there are better options than VGLI. The reason is that starting at age 30, VGLI premiums start to increase and continue to do so every 5 years. As you reach your 60’s and 70’s, the cost becomes extremely expensive.
What are Military Associations?
The typical military association is a non-profit voluntary membership association formed to promote the general welfare and economic interests of its members and their families. They generally offer a variety of financial services including group term insurance with no war or terrorism restrictions. The advantage of military association group term is that it costs less than VGLI, in fact, significantly less as you reach older ages. You do need to be reasonably healthy, but you are eligible to start a program all the way up to age 70. Unlike VGLI, you can also obtain coverage for your family members.
What about traditional life insurance companies?
There is a group of traditional life insurance companies that are authorized to convert your SGLI without evidence of health status during your initial 120 day period after leaving military service. When you choose this option, group term coverage is not available. You must choose a whole life policy. This means that your premiums will remain level throughout your life-time, however, the monthly cost will be considerably higher initially than term insurance.
Whether you were in the Army, Navy, Marines, Air Force, or Coast Guard there are many veterans benefits available to you. This is only one. Make sure you do your homework and take advantage of all your benefits.