Active duty service members are eligible for very low term life premiums through Servicemembers’ Group Life Insurance (SGLI), and once out of the service, it rolls over to Veterans’ Group Life Insurance program (VGLI). VGLI will allow you to keep your term insurance for life as long as the premiums are paid. While this looks like a great opportunity, as you get older, VGLI may no longer be your best option. We are are to help you find out the pros and cons of VGLI and some alternatives to consider.
Advantages of VGLI
You cannot be turned down for VGLI as long as you are an eligible veteran. There are no lab tests or medical exams, no health questions and neither physical nor mental health issues will affect premiums. It does not matter if you are overweight and or use tobacco products. The death benefit from this coverage will only decrease if you request it, and as long as premiums are paid the policy will remain in place.
VGLI has no enrollment or membership fees. You can manage your account online and if you’re unsure just how much insurance you’ll need. VGLI offers assistance with an online calculator.
Disadvantages of VGLI
While guaranteed acceptance is convenient, it does comes at a cost. VGLI rates are affordable for younger veterans, but upholding this coverage becomes quite costly in later years. This is because the only factor when determining VGLI premiums is age. This means a $400,000 policy costing only $32 a month for someone age 29 or younger escalates significantly every five years. By age 75, that premium reaches a mind-blowing $1,840 per month. On top of that, VGLI recently raised premium rates across the board by 5 cents per $1,000 of coverage.
Additionally, veterans should be aware that VGLI only offers term life insurance. This means the policy has a death benefit only, without building any cash value as an investment.
Is there a better option?
You may still be able to reduce your costs. Here are a few options to consider:
- Start shopping around while you’re still young and in good health, there are other types of life insurance, such as a whole life policy, with low rates you can lock in for an extended period of time. Plenty of insurers also allow you to lock in rates with term life insurance for periods of up to 30 years, however, this coverage will not build any cash value.
- You’ve also got the option of converting your VGLI policy to an individual permanent life policy with a participating insurance company at standard premium rates, without proof of good health.
- Always explore other military insurers. AAFMAA and USAA both offer life insurance to healthy older veterans.
The bottom line
When it comes to veterans’ life insurance, one size does not fit all. Those in good health who are willing to undergo a physical exam and/or some lab screenings may do better by shopping around. If, on the other hand, you’re facing health challenges, VGLI may still be your best option for maintaining lifetime coverage.