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If you’re currently serving in the military but plan to leave shortly, you may want to learn more about what will happen to your life insurance. While life insurance is available for veterans, this solution may not be offered to younger individuals who don’t have any dependents. Let’s dig deeper into your life insurance options once you leave the military.
Servicemembers’ Group Life Insurance is available to military members and is considered one of the most affordable life insurance plans. SGLI doesn’t require underwriting, and all members will pay the same premium regardless of their physical condition, sex, or age.
Anyone who joins the military is automatically enrolled at the maximum coverage of $400,000, with a premium of $28 per month. It’s possible to opt out of this life insurance if you have another policy or if this coverage doesn’t fit your needs.
Your life insurance coverage won’t end immediately. You’ll have 120 days of free coverage from the day you leave the military. If you’re disabled, this free coverage is extended for as long as two years. Reserve members who don’t qualify for full coverage can receive part-time coverage.
You may be able to extend your insurance coverage with the disability extension mentioned above. You could also apply for Veterans’ Group Life Insurance, which gives you the same coverage amount without proving that you’re in good health.
It’s important to note that premiums for VGLI policies cost more than what you would pay for SGLI insurance. While these premiums are based on age, they won’t take your medical history into account. If you want VGLI insurance, you’ll need to convert your SGLI policy within 120 days after leaving military service.
Military members can convert their SGLI policy to a more permanent commercial life insurance policy. If you convert your policy in the 120-day window, your current health and condition won’t be taken into consideration by the insurance provider. Some policies will be more expensive than others.
This conversion only works if you move over to whole life insurance, which is more costly than term life insurance. Whole life insurance remains in place until you die, after which a benefit is paid.
Whole life policyholders can also build up savings via “cash value,” which can be accessed in an emergency. Term life insurance provides coverage for a limited period and will pay out if you die before the policy ends. Most terms last anywhere from 10-30 years.
You don’t have to lose your life insurance benefits if you leave the military. By converting to a VGLI or a commercial life insurance policy, you’ll never be without coverage. Remember to do your research and ask for help if you’re not sure about what direction to go in when making this transition.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.