Veterans’ Group Life Insurance (VGLI): Definition, Pros and Cons

Active-duty military service members can get access to low-cost term life insurance premiums through Servicemembers’ Group Life Insurance, or SGLI. Once out of the service, they can apply for the Veterans’ Group Life Insurance program, or VGLI, which allows them to keep their term insurance for life as long as they pay the premiums.

So what’s the catch? While this looks like a great opportunity initially, as you get older, VGLI may no longer be your best option when leaving the service. Learn about the pros and cons of VGLI and some alternatives to consider.

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What is Veterans’ Group Life Insurance?

VGLI is a type of group term life insurance offered to former members of the military. Death benefits range from $10,000 to $500,000 and can be adjusted if your needs change. Unlike level term life insurance policies, VGLI premiums increase as you age. For example, you can get a $100,000 policy for $12 a month at age 35, but when you reach 55, you’ll be paying $60 a month for the same coverage.

VGLI is a continuation of the Servicemembers’ Group Life Insurance coverage offered to active military personnel. This means you must hold SGLI coverage at the time of discharge to qualify for VGLI.

Who is eligible for VGLI?

You need to participate in SGLI during your service to qualify for coverage after you’ve left the service. You can sign up for continuous VGLI coverage within one year and 120 days of separation from service if you meet one of the following criteria:

• You’ve been released from active duty. 

• You’ve been placed on the Temporary Disability Retirement List (TDRL).

• You’ve separated, retired or been released from the Ready Reserve or National Guard.

• You were injured or disabled during active part-time service in the National Guard or Reserves. 

• You’ve been assigned to the Individual Ready Reserve (IRR) or the Inactive National Guard (ING), including the United States Public Health Service Inactive Reserve Corps (IRC)

If you smoke or have a pre-existing medical condition and would like to get coverage without taking a medical exam, you’ll need to sign up for VGLI within 240 days of leaving the service.

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Pros and cons of VGLI

VGLI may be easy to apply for, but it may not be the most cost-effective solution. Learn more about the pros and cons before signing up for coverage.

VGLI pros

• Guaranteed acceptance. As long as you’re an eligible veteran, you can’t be turned down for VGLI if you sign up for coverage within one year and 120 days of separation. 

• No medical exam. There are no health questions, lab tests or life insurance medical exams if you enroll within 240 days of leaving your role in the military. You also aren't penalized for your health — premiums don’t factor in physical or mental health conditions. If you apply after the 240-day period, you’ll need to submit medical details to prove you’re in good health. 

• Payout stays the same. The death benefit never decreases unless you request it, and the policy remains in force as long as premiums are paid. VGLI policies also have an accelerated death benefit feature, which means you can access part of your policy's payout if you become terminally ill.

• No membership fees. VGLI has no membership or enrollment fees, just like many group life insurance programs offered by private employers.

VGLI cons

• Coverage is based on your SGLI policy. While most active-duty service members are automatically enrolled in SGLI, if you declined or lowered your coverage, this can limit your VGLI death benefit. You can increase your coverage beyond your original SGLI limit, but you can only raise your policy’s death benefit by $25,000 every five years until you’re 60 years old.

• Higher premiums for older applicants. While guaranteed acceptance is convenient, it comes at a cost. VGLI rates are affordable for younger veterans, but maintaining this coverage can become expensive in later years. This is because rates increase significantly as you age. Rates for older veterans can be high compared with standard term life rates.

• No permanent policy options. VGLI offers only term life insurance. This means the policy has a death benefit but doesn't build any cash value. 

• Low coverage amounts. VGLI has a relatively low death benefit cap of $500,000. This might not be a problem for you, but be aware that you'll need to find additional coverage if you want a policy that pays out more than $500,000.

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Is VGLI worth it?

For some people, VGLI can provide the best value for term coverage, while others may find a better deal with a civilian life insurance policy.

Because VGLI offers guaranteed acceptance with no medical exam within 240 days of leaving service, it can be the best choice if you’re looking for life insurance with pre-existing medical conditions or smoke — this is because VGLI rates are purely based on age and don’t factor in your health or smoking status. Premiums do increase with age, so healthy applicants who want coverage for a set amount of time may find a better value by shopping for a policy on their own.

You might be a good candidate for VGLI if you want to be able to upgrade your coverage to permanent life insurance later. Some commercial companies, like Guardian, MassMutual and Prudential, let you convert a VGLI plan to permanent life insurance without a medical exam. But if you’re in the market for a policy that will pay out more than $500,000 to your life insurance beneficiaries, VGLI may not suit your needs.

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How much does VGLI cost?

VGLI rates are determined by your age and the value of the death benefit you select. You can get coverage in $10,000 increments from $10,000 to $500,000. The lowest prices are offered to applicants younger than 30, with rates increasing every five years until age 80, when they top out.

You can still keep coverage after 80, and the price stops increasing based on age. The table below shows rates for $100,000, $300,000 and $500,000 of coverage.

Sample monthly VGLI rates

VGLI rates vs. term life rates

Here’s what you can expect to pay for VGLI versus term life policies with $500,000 of coverage. The term life rates reflect the super preferred class, which are typically the healthiest applicants.

Term life is considerably cheaper than VGLI as you get older. While VGLI rates increase every five years, rates for level term life stay the same for the duration of the policy.

Sample annual rates for a $500,000 policy: VGLI vs. term

VGLI rates vs. whole life rates

When you’re younger, a VGLI policy may be cheaper than a whole life policy, but rates increase as you age. To compare, whole life rates typically stay the same, meaning you’ll likely spend more money on a VGLI policy in the long run.

For example, the lowest annual cost of a $500,000 whole life policy for a healthy 30-year-old is $3,036 with Corebridge Financial. If the applicant lives to 80, they will have spent a total of $151,800. If the same applicant bought a VGLI policy, they will have spent $315,300 by age 80.

However, if you’re shopping for coverage when you’re older, a whole policy may not be the right option. A healthy 80-year-old can buy $500,000 of VGLI coverage for $27,000 a year, while the same applicant will likely pay $42,954 for a whole life policy.

Sample annual rates for a $500,000 policy: VGLI vs. whole

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Alternatives to VGLI

Depending on your health, when you sign up and whether you want temporary or permanent coverage, buying life insurance on the open market may be a better option than VGLI.

• Level term life insurance. A number of insurers allow you to fix rates with term life insurance for periods usually up to 30 years, and coverage amounts can range into the millions. If you need more coverage than VGLI provides, term policies are usually the cheapest life policies available.

• Permanent life insurance. If you want to build cash value, you may be able to lock in rates for other types of life insurance, such as whole life. Permanent life insurance is more expensive than term life, but coverage can last for the rest of your life, and your premiums won’t increase over time.

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