Life Insurance for Military Personnel
For those in the military who risk their lives to protect our freedom, it is important that they are provided with affordable life insurance options without any major restrictions. If you are in the military, we want to make sure that you know all of your best options for life insurance coverage. Government sponsored programs offer limited coverage amounts and many commercial life insurance companies restrict coverage for active military personnel. In this post we will talk about life insurance options for military personnel and how to get the best rates for coverage. Here is what you need to know about life insurance for military personnel.
Servicemembers Group Life Insurance (SGLI)
The good news is that the government automatically offers Servicemembers Group Life Insurance to all active duty military personnel with coverage up to $400,000. Servicemembers can decline coverage or take a reduced amount in $50,000 increments. The rates for SGLI are very affordable, making it an excellent option for many while on active duty. According to the U.S. Department of Veterans Affairs, $400,000 of coverage would cost $29.00 per month. This includes Traumatic Injury Protection Coverage (TSGLI) which provides short-term financial assistance to severely injured servicemembers to assist them in their recovery from traumatic injuries. Coverage is also available for spouses and children as well. SGLI coverage is available until the servicemember separates from the military. Upon separating from the military, SGLI coverage can be converted into Veteran’s Group Life Insurance (VGLI).
Veterans Group Life Insurance (VGLI)
Once you have separated from the military, you can convert your SGLI policy to a VGLI. You may enroll for a maximum amount of coverage that is equal to the amount of Servicemembers’ Group Life Insurance (SGLI) coverage you had when you separated from service or you can opt for a lesser amount in $10,000 bands. Once enrolled in VGLI, you will have the opportunity to increase your coverage by $25,000 every five years up to the legislated maximum of $400,000, until age 60. Veterans Group Life Insurance works much differently than SGLI. Rates for VGLI coverage increase in 5 year age bands and can become quite expensive compared to an individual policy outside of the VGLI program, especially once you hit age 30 and older and if you are in good health.
Are the SGLI and VGLI Plans Worth it?
SGLI is an excellent plan that offers many benefits. The rates for this policy are more than reasonable when you consider the fact that you are automatically enrolled when you are on active duty and the Traumatic Injury Protection Coverage is an added benefit. The downside to SGLI coverage is the limited amount of coverage that it provides at a maximum of $400,000. Most families with a mortgage and multiple children to support need more coverage. If that is the case, supplementing an SGLI policy with an individual policy could make a lot of sense. The other issue with SGLI coverage is that you can’t keep it when you leave the military. If you want to keep government sponsored coverage, you must switch to the more expensive VGLI plan.
VGLI works like other traditional group plans by increasing rates in 5 year age bands. VGLI might be a good option if you developed health issues while on SGLI and are no longer eligible for SGLI coverage because of separation from the military. You can convert to a VGLI plan without proof of insurability if done within 240 days. If you are in good health though, a VGLI is probably not a good option. Not only are there limits on coverage, but the increase in rates every 5 years will really add up over time compared to an individual policy.
Options Outside of SGLI and VGLI
Almost all life insurance companies place some restrictions on underwriting active military personnel. The most common restriction is on active military personnel who have orders to serve in a hazardous area or war zone. Most companies will not offer coverage. Other restrictions exist for members of special forces such as Army Rangers, Delta Force and Navy SEAL and those who hold other more hazardous combat positions such as military pilots.
The good news is that there are a couple of companies out there that will insure active military personnel with orders to hazardous areas or war zones. Unfortunately, they restrict coverage for those in special forces but all other active military personnel with orders to serve in war zones are eligible for coverage. With an individual policy outside of government sponsored coverage, you can lock in rates for 20 or even 30 years without ever having to worry about converting to the more expensive VGLI. It is important to note that the application and all underwriting requirements must be completed in the United States.
Converting SGLI and VGLI Coverage to an Individual Policy
There are some companies that will allow you to convert your SGLI or VGLI policy to an individual policy at ‘Standard’ rates without proof of insurability. You must convert to a permanent policy such as whole life. This could be a viable option for someone with health issues looking to lock in a certain amount of lifetime coverage.
Supplementing Your SGLI Coverage
If you are in need of more than $400,000 of life insurance, it makes sense to supplement your SGLI policy with an individual policy. The amount of coverage you will be eligible for will be based on your pay grade and financial underwriting limits set by the insurance company. A 25 year old male nonsmoker who is considered a ‘Preferred Best’ health rating could get $500,000 of level premium coverage for just under $22 per month for 20 years. If he wanted 30 years of coverage, it would only cost about $44 per month. A 25 year old female nonsmoker who is considered a ‘preferred Best’ health rating could get $500,000 of level premium coverage for about $19 per month for 20 years. If she wanted 30 years of coverage, it would only cost about $39 per month.
Replacing Your VGLI Coverage
VGLI can be quite expensive as you get older considering the fact that rates increase every 5 years. If you have health issues, it might make sense to covert your SGLI coverage to VGLI coverage. If you’re healthy, you will most likely qualify for a much lower rate with an individual policy. If you are no longer on active duty, you won’t be restricted on your coverage and can pretty much shop around to any company for the best rate. By purchasing an individual policy, you can lock in a level rate for 30 years if you wanted. If you want to see how your VGLI policy rates compare to an individual policy, we would be happy to do the analysis for you to see if there is an opportunity for savings.
Protecting Those Who Serve Our Country
If you are a member of the military and want to know more about your your life insurance options, we are here to help. We know which companies offer the most competitive rates for members of the military whether on active duty or not. If you have any questions about life insurance coverage, please give us a call at 888-687-9444 or email us at info@archstoneagency.com.
About Us
Archstone Insurance Services, LLC is an independent agency that shops over 40 of the top life insurance carriers to provide huge savings on life insurance coverage for our clients. We are happy to answer any questions you might have about any of the insurance products we offer, your planning needs or your existing coverage. Feel free to call us directly at (888) 687-9444 or email us at info@archstoneagency.com.
