When you’re a member of the military, many of your needs are taken care of, including access to inexpensive life insurance for you and your family. But the transition to civilian life can be difficult. Working out your own life insurance is only one of the challenges.
The military provides life insurance benefits for veterans, as they do for active duty military. But if you’re no longer in the service and you're someone who needs life insurance, striking out on your own to buy coverage may be your best bet.
Military retirees receive life insurance
When you join the military, you’re automatically enrolled in Servicemembers Group Life Insurance (SGLI).
Veterans can convert that coverage to Veterans Group Life Insurance (VGLI) for up to $400,000 worth of whole life insurance protection.
Unlike active duty members, however, veterans aren’t automatically enrolled in the program, and if you do decide to convert your SGLI to VGLI, you’ll have to act fast. Use this chart from the U.S. Department of Veterans Affairs, which shows key time frames for converting. You’ll continue to receive SGLI for free for 120 days after you leave the military. At that point, and for the next 120 days, you can convert your SGLI to VGLI without a medical exam.
In between, you won’t have coverage, and if you wait longer than eight months from your date of separation, you’ll need to get checked out by a doctor to qualify for a new plan. If you wait longer than a year after your SGLI coverage expires, you won’t be able to convert it to VGLI at all.
Another thing you’ll want to keep in mind about VGLI premium rates: It’s more expensive than SGLI, and unlike SGLI or private, level-term plans, the monthly cost increases as you age. Although SGLI premiums top out at $29 per month for the highest level of coverage, a 32-year-old retired member of the military would pay $40 per month for coverage through VGLI. By contrast, according to NerdWallet research, she could get get life insurance quotes of $20 to $25 per month for a $400,000, 20-year term policy from a private insurer, provided she’s in good health.
Disabled retirees also have options
If you’ve experienced illness or injury due to your time in the military, or simply aren’t as young as you used to be, VGLI coverage looks more appealing. For example, a 56-year-old in average health leaving the military would pay $268 per month for $400,000 worth of VGLI coverage. According to NerdWallet research, she could find 20-year term life insurance policies for the same amount of coverage costing less — around $220 per month — but she could also find policies that cost over $300 a month, depending on health conditions.
Disabled military retirees can also apply for a two-year extension of SGLI benefits. And if you suffer a terminal illness, you may receive up to half of your life insurance benefit to pay for treatment and final expenses.
Private coverage options are available
Whether you can find cheaper coverage elsewhere, want a whole life insurance policy that can build cash value, or you simply need more than the maximum amount of military life insurance available, you may decide to buy your own individual policy once you leave the military — especially if you’re still young and healthy.
In this case, you can simply shop online or talk with your local independent life insurance agent to find the best rates. You can get life insurance quotes online. You might also want to check out insurers that cater to the military, like the American Armed Forces Mutual Aid Association or USAA. For example, USAA offers a program in which members of the military can convert their SGLI coverage to USAA coverage and cover their spouses and children — unlike VGLI.