Alternatives To Veterans Group Life Insurance

Insurance Blog

If you are active duty military, you have Servicemembers Group Life Insurance, or SGLI, to protect your family while you serve. Once you are discharged, you can purchase Veterans Group Life Insurance, or VGLI. Or, you can purchase life insurance from a company that sells it to the private sector. Here's what you need to know to determine which type of policy is best for you.

How VGLI Works

The only factor for determining the premiums for VGLI is your age. This means that:

  • Your premiums will go up as you age, and
  • Everyone of the same age, regardless of health, pays the same premium. This means that healthy people are paying the same as those who could not otherwise get coverage.

VGLI is guaranteed. You cannot be turned down, you don't have to have a physical or answer any medical questions, the death benefit stays the same unless you request that it be decreased, and it will always be in place as long as you pay the premiums.

VGLI is term life insurance. This means the policy has no cash value. If you stop paying your VGLI, you lose your coverage and the money you've paid into it.

The premium on VGLI goes up every five years until ages 75. For the maximum coverage amount of $400,000, a veteran aged 75 or older would pay $1,840 a month.

VGLI is a good option for two types of people:

  • Those who are young, because their costs are low. People often buy term life insurance when their children are young, and discontinue it when the children are able to support themselves.
  • Those who cannot otherwise qualify for life insurance due to medical reasons.

Alternatives to VGLI

If you are in good health and relatively young, you should shop around to see how much another insurance policy would cost. Make sure that you're comparing apples to apples, though – a universal life or whole life policy will be more expensive that a term life policy. A permanent policy may be the best kind of policy for you if you're looking for an investment along with your life insurance.  

You may be able to convert your VGLI policy into an individual whole life policy without having to prove that you are in good health. To do so, you need to purchase a policy from one of the dozen or so insurance companies that allow this conversion. Note that you can only convert to a whole life policy, which is expensive but does have cash value. The premium on a whole life policy is level, so you will pay the same amount every year.

You can also convert your SLGI policy within 120 days of your separation from the military.

Think about how much and what type of life insurance you need, and shop around to get the best policy for you and your family. Contact the Easy Insurance Group for more information.   


4 August 2016