If you’re military, you probably know all about Servicemember Group Life Insurance, or SGLI. It’s provided coverage for you and your family for your whole career.
However, transitioning out of the military presents new life insurance options worth exploring. You can go with a Veteran Group Life Insurance policy (VGLI); life insurance through a military association such as American Forces Mutual Aid Association (AFMAA); or opt for private life insurance like term life or whole life.
Either way, the best piece of advice any life insurance professional can give a retiring servicemember is this: get quotes early.
You have 120 days from discharge to choose the best life insurance option for you and your family. You can stick with government group insurance or go private with term or permanent life insurance from a commercial life insurance company. But perform your due diligence to determine which will serve you best going forward. And if you’re leaning toward private, keep in mind that it takes between four to six weeks to go through the private life insurance underwriting process.
Online life insurance quotes are easy to get and provide automatic side-by-side comparisons to give you a bird’s-eye view of the marketplace and what you can expect to pay.
Term Life Insurance for Veterans
Term Life insurance is the most affordable commercial life insurance with the most coverage.
It’s set up for a set amount of time with a set amount of coverage at a set premium payment. For example, if you are a healthy 40-year-old male, you can expect to pay around $49 per month for a 30-year $500,000 policy. Your rate does not change.
A similar VGLI policy would cost the same 40-year-old more than $80 per month, renewable every five years with a rate increase. Also, you wouldn’t be able to purchase $500,000 worth of coverage with government life insurance. VGLI coverage caps at $400,000.
Term life is ideal for young families with dependents as it provides a financial safety net when you need it most. And as your family, income and needs grow, you can convert to a permanent policy with cash value without submitting to a medical exam.
Term life insurance does require underwriting, which means a medical exam and labs. So, if you’re retiring with a service-related injury, you probably won’t be able to qualify for term life or will pay much higher premiums than you would through government-sponsored insurance.
Permanent Life Insurance for Veterans
Permanent life insurance is a bit more expensive than term life but generates cash value you can use in a variety of ways—to borrow against or to pay your premiums, for example. Whole life is a type of permanent insurance.
If you decide to go with VGLI when you retire, you can later convert to a private whole life insurance policy. Unfortunately, you cannot do so with term life.
Combination Private and Military Life Insurance
But you can purchase additional term life coverage to supplement a VGLI policy. Experts recommend families obtain coverage for between 10- and 15-times annual income. So the $400,000 coverage cap VGLI offers probably is not enough to protect your family should they lose your income if you pass unexpectedly.
If you’re in reasonably good health, you can purchase a supplemental term life policy for an additional $250,000 for as little as $28 per month.
No matter which life insurance you go with, remember that it’s vital that you start shopping around for the best insurance quotes online as early as possible.
Those 120 days will go fast.