VGLI can be a good choice for some veterans, like those with health issues or needing short-term coverage. But, it might not be the cheapest option, mainly for non-smokers looking for long-term coverage. Military Benefit Association (MBA) Life Insurance could offer better value for some. Let’s look into the details to see if VGLI is right for you.
What is Veterans’ Group Life Insurance (VGLI)?
VGLI is a life insurance plan for veterans after they leave the military. It continues the coverage of Servicemembers’ Group Life Insurance (SGLI), which active-duty personnel have. When service ends, SGLI stops, but veterans can keep coverage with VGLI.
Here’s how VGLI works:
- Automatic Conversion: You can switch to VGLI from SGLI without a medical exam if you apply within 240 days of leaving the military.
- Renewable Term Policy: VGLI is an annual policy that renews automatically if you keep paying premiums.
- Coverage Amount: You can get up to $500,000 in coverage, the same as the maximum SGLI benefit.
But is VGLI right for everyone? It depends on your health, finances, and insurance needs.
Who Should Consider VGLI?
VGLI is great for certain veterans, like those with health issues. Here are some situations where VGLI might be the best choice:
1. Veterans with Medical Conditions
VGLI has a “guaranteed acceptance” period. If you apply within 240 days of leaving, you don’t need a medical exam. This is perfect for veterans with injuries or illnesses that might make it hard to get other insurance. After 240 days, you can apply again within a year and 120 days, but you’ll need a medical exam then.
2. Smokers
Smokers often pay more for life insurance because smoking increases death risk. VGLI charges the same for smokers and non-smokers. This makes VGLI a good deal for smokers, as they pay less than with most private insurers.
3. Short-Term Coverage Needs
If you only need insurance for a few years, VGLI is convenient. It’s a renewable term policy, so you can keep coverage by paying premiums. But, premiums go up every five years, making it more expensive over time.
VGLI vs. Military Benefit Association (MBA) Life Insurance
Veterans looking for life insurance options should compare VGLI with Military Benefit Association (MBA) plans. We’ll look at the main differences between VGLI and MBA term life insurance.
Cost Comparison
| Age | VGLI Monthly Premium (For $500,000 Coverage) | MBA Term Insurance Monthly Premium (For $500,000 Coverage) |
|---|---|---|
| 29 | $32 | $20 |
| 45 | $144 | $57 |
| 75 | $1,840 | $784 |
Key Takeaway: MBA life insurance is often cheaper, which is great for non-smokers and those looking for long-term coverage. For example, a 29-year-old non-smoker pays much less with MBA than with VGLI.
Coverage Amount
VGLI only offers up to $500,000 in coverage. But MBA Term Insurance can go up to $1,000,000. If you need more to cover things like your mortgage or your kids’ education, MBA might be better.
Policy Terms
VGLI is a yearly renewable term policy, so your premiums go up every five years. MBA, on the other hand, offers 10- and 20-year level term policies. This means your premiums stay the same, making MBA more affordable for long-term coverage.
When VGLI May Not Be the Best Option
VGLI has its benefits, but it’s not always the best choice. Here are some situations where VGLI might not be the best:
1. Healthy Non-Smokers
Healthy veterans who don’t smoke often find VGLI more expensive. MBA life insurance plans are cheaper for non-smokers because they consider individual health risks. VGLI spreads risks across all policyholders.
2. Long-Term Coverage Needs
If you need coverage for 10, 20, or more years, VGLI might not be the best deal. Its premiums increase every five years, making it more expensive as you get older. MBA’s level term policies offer stable premiums for up to 20 years, helping you save money over time.
3. You Need More Than $500,000 in Coverage
VGLI’s $500,000 limit might not cover all your financial needs, like a large family or big financial obligations. MBA offers coverage up to $1,000,000, giving you more flexibility to meet your family’s needs.
4. Missed Application Deadline
If it’s been more than 16 months after you left the military, you can’t get VGLI. But MBA life insurance is available to veterans at any time, as long as they meet health requirements.
Alternative Life Insurance Options for Veterans
Veterans have many life insurance choices beyond VGLI and MBA. Here are a few:
1. Private Term Life Insurance
Many private companies offer term life insurance. These policies might give better rates to healthy people. They often need a medical exam but can offer rates based on your health and lifestyle. Private insurers can also provide more coverage than VGLI.
2. Whole Life Insurance
Whole life insurance is a good choice for permanent coverage. It builds cash value over time. Unlike term policies, whole life insurance covers you for life. Some policies let you borrow against the cash value.
3. Disability Insurance
Life insurance is key, but don’t forget about disability insurance. Military and veterans should think about extra disability coverage. This is important if you’re at risk for injuries or conditions that could lead to disability.
Frequently Asked Questions About Veterans’ Group Life Insurance (VGLI)
1. Is VGLI a term or whole life policy?
VGLI is a term life policy. It’s an annual renewable term policy. This means you can renew it each year, but your premiums will go up every five years.
2. How much does VGLI cost?
VGLI costs depend on your age and coverage amount. The more you age, the more you pay. For example, a 29-year-old pays about $32 a month for $500,000 coverage. A 75-year-old pays $1,840 a month for the same amount.
3. Can I increase my VGLI coverage?
No, VGLI coverage is limited to $500,000. If you need more, you might want to look at other options like MBA life insurance. MBA offers coverage up to $1,000,000.
4. What happens if I miss the VGLI application deadline?
Missing the one year and 120 days (16 months) deadline means you can’t get VGLI. But, you can apply for MBA life insurance at any time after leaving the military, if you meet their health standards.
5. Is VGLI the most cost-effective option for veterans?
VGLI can be a good deal for veterans with health issues or those needing short-term coverage. But, for healthy veterans, private life insurance or MBA might offer better rates and more flexible options.
