Term Life Insurance and US Veterans

Introduction

Once active duty ends, many veterans may consider getting life insurance. And, although many veterans are eligible to receive benefits from the Department of Veteran Affairs (VA), it is important to have a plan ready once your active duty time is up.

The big question is what does Term Life Insurance Cover? Simply put, life insurance pays out a lump sum to your beneficiary if you die unexpectedly over the chosen term (usually twenty years). Term life insurance covers you for a set period of time, whereas whole life insurance covers you for your entire life.

What Is Life Insurance for Veterans?

Life insurance offers a way to provide financial support to your loved ones in the event of your death; specifically surviving dependents, a spouse, or other designated recipient.

Unlike civilians in general, it can be more difficult for veterans to get traditional insurance policies due to residual mental and physical health issues. As such, life insurance aimed at veterans considers these challenges that this group faces and provides them with suitable and cost-effective alternatives.

What Does Life Insurance for Veterans Typically Include?

Life insurance products aimed at veterans often includes optional coverage for children and spouses, with some offering coverage for eligible grandchildren. Companies may also offer preferred ratings (or discounted monthly premiums) for those with healthy lifestyles. Many pay benefits even in the event of a war-related death.

What is Servicemembers’ Group Life Insurance (SGLI)?

SGLI offers low-cost term coverage to eligible servicemembers, and if you meet certain criteria the VA will automatically sign you up through your service branch (although having SGLI is not compulsory) (VA, 2022a). Eligible servicemembers can receive coverage up to a top limit of $400,000 and 120 days of free coverage from the date you left the military.

What is Veterans’ Group Life Insurance (VGLI)?

When you leave the military, you can apply for VGLI within one (1) year and 120 days from your discharge for up to the amount of coverage you had through SGLI.

You can also convert your SGLI policy into a civilian policy (through participating companies) within 120 days from the date you left the military.

The VA also offers other life insurance options depending on your eligibility and circumstances (VA, 2022b).

What about Insurance Plans Offered by Private Insurance Companies?

Although SGLI and VGLI life insurance options are offered to eligible servicemembers, the coverage may not meet all of the veterans’ needs. Choosing a plan with a private insurance company may offer more of the benefits you desire. It all depends on what you are looking for in a life insurance policy.

Should I Give Up My Private Health Insurance or Other Insurance (like TRICARE or Medicare) if I am Accepted into the VA Healthcare Programme?

The VA states (2022c) “This is your decision. You can save money if you drop your private health insurance, but there are risks. We encourage you to keep your insurance because:

  • We don’t normally provide care for Veterans’ family members. So, if you drop your private insurance plan, your family may not have health coverage.
  • We don’t know if Congress will provide enough funding in future years for us to care for all Veterans who are signed up for VA health care. If you’re in one of the lower priority groups, you could lose your VA health care benefits in the future. If you don’t keep your private insurance, this would leave you without health coverage.
  • If you have Medicare Part B (coverage for doctors and outpatient services) and you cancel it, you won’t be able to get it back until January of the following year. You may also have to pay a penalty to get your coverage back (called reinstating your coverage).”

Summary

If you decide you are looking for other benefits than what is offered through the VA, understand that you have alternatives. Many private insurance companies offer affordable term life insurance plans that may be available for veterans. Explore and research to see if a plan works with your history.

References

VA (Department of Veterans Affairs). (2022a) Servicemembers’ Group Life Insurance (SGLI). Available from World Wide Web: https://www.va.gov/life-insurance/options-eligibility/sgli/. [Accessed: 14 December, 2022].

VA (Department of Veterans Affairs). (2022b) About VA Insurance Options and Eligibility. Available from World Wide Web: https://www.va.gov/life-insurance/options-eligibility/. [Accessed: 14 December, 2022].

VA (Department of Veterans Affairs). (2022c) VA Health Care and Other Insurance. Available from World Wide Web: https://www.va.gov/life-insurance/options-eligibility/. [Accessed: 14 December, 2022].

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