In addition to private life insurance options, active and retired military have access to several U.S. Department of Veterans Affairs (VA) policies. Choosing the right policy (or sometimes more than one policy) can help ensure your family’s financial stability after you’re gone.
Life insurance is a valuable tool to ensure your family’s financial future in the event something happens to you. Having the right policy in place is important for everyone. It can be even more important to people in high-risk jobs, like active and retired military. Before we get into the options for life insurance for service members, let’s cover some basics.
Life insurance is an agreement in which you make regular payments, called premiums, and an insurance company pays your chosen entities a tax-free lump sum of money when you pass. It sounds pretty simple, but there are a lot of opportunities to customize coverage, and that can get confusing quickly. Retired service members have even more options. Here are some terms and ideas you should become familiar with before you make a decision.
Term life insurance is designed to cover a certain number of years and then end. Its main purpose is covering lost income and protecting a family’s lifestyle in the short term should something happen. When you are young, the premiums are lower than they would be for the same amount of whole life insurance, but there is no guarantee that a benefit will be paid to your beneficiaries, since it’s possible to outlive your coverage. As you age, premiums for term life will go up, and at a certain point they will become unaffordable. Most VA-sponsored life insurance is term life. While you can continue to renew your policies up to a certain age, it may cost more than you can afford as you get older.
Whole life insurance, on the other hand, will last for life. Your premiums will never change, and as long as you continue to pay them, the life insurance benefit is guaranteed. Whole life might cost you more per month now, but it could end up being cheaper over the long run if you lock in a good rate while young. You can compare the biggest differences between term life and whole life here.
Everyone’s situation is different, and this question can be answered only by you and your family. Carefully consider what they might need if something happened to you now or later in life. If you have a spouse or dependents who rely on your income, try to ensure that they can replace that income for a number of years. Also, take into account mortgage payments and other debt that could impact your family financially.
With all life insurance policies, whether they are VA-sponsored or private, you will need to select one or more beneficiaries. That’s simply the people who will receive the life insurance benefit when you pass. You can split it up however you like between as many parties as you like. Your beneficiary doesn’t necessarily have to be a family member. Other common beneficiaries are trusts, charities, and estates.
Related: Choosing a beneficiary
The U.S. Department of Veterans Affairs has insurance products that cover active military, veterans, and their families. These options have expanded coverage for veterans with medical conditions and disabilities, whether they happened during active service or after. So, even if you are unable qualify for individual private insurance, you may still be able to purchase coverage. Learn more about your VA-provided life insurance options at www.benefits.va.gov/insurance/.
For most on active duty, coverage in the low-cost Servicemembers’ Group Life Insurance (SGLI) is automatic. The monthly premium for SGLI is usually significantly lower than for the same private term life insurance coverage, and you’ll have the option to increase your benefit up to $400,000. After you leave the service, it will need to be converted to another product in order for you to maintain coverage.
After your separation from the military, you can convert your SGLI into Veterans’ Group Life Insurance (VGLI)—a lifetime renewable term coverage policy. You start with the same coverage you had through SGLI, and, if you desire, you can increase it every five years by $25,000, up to the maximum of $400,000. In order to guarantee your previous benefits, you must submit your application within one year and 120 days of your separation from the military. If you do so later than that, you may have to pass a medical exam, and coverage amounts may be recalculated.
Service-disabled Veterans’ Insurance (S-DVI) is a program specifically for veterans who have been given a VA rating for a new service-connected disability in the past two years (even if the rating is 0%). This covers all related health issues, including PTSD. You can apply online or through your local VA office.
Most active and retired servicemembers will use one of the above options, but there are others that cover specific cases.
If you qualify for the VA-sponsored policies for veterans above, you should consider contributing to those before adding or changing to private life insurance. However, there are a number of reasons you may want to go with a private company. Here are some benefits of affordable private life insurance for veterans to consider:
The VA does not currently offer whole life insurance (as of 2021), so in order to guarantee lifelong protection, you will need a private individual policy. This doesn’t have to take the place of your VA-sponsored term policy. Often, it’s smart to add a whole life policy in addition to the term life coverage you have as a former servicemember.
The maximum amount of the life insurance benefit you can get with VA-sponsored programs is $400,000. This is designed to help replace income for a few years should something happen to you. Many families will want more coverage than this and look to private insurance companies to add a second policy.
While VA-sponsored life insurance for veterans tends to have lower premiums, those premiums can change. As you get older, you become more risky to insure, and your costs will go up. Once you are over 60, the increases can be steep. With a private whole life policy, you can lock in a benefit at a premium that will never increase. It may cost you more per month now, but it could save you money down the road.
Cash value is another benefit of whole life policies for veterans that you can’t get with VA-sponsored policies. The longer you hold a permanent policy, like whole life, the more cash value it can accrue. You can access or borrow against this amount while you are still alive, giving you some flexibility in planning for retirement.
Related: Should you cash in life insurance?
At New York Life, we thank you for your service. Our agents offer a no-hassle consultation of your life insurance and retirement needs. Let us help ensure that you and your family have the financial security they deserve.
1 The guarantees of a life insurance policy are based on the claims-paying ability of the insurer.
2 U.S. Department of Veteran Affairs, “What life insurance benefits can I get with VGLI” at
3Accessing the cash value of a whole life policy will reduce the available cash surrender value and the death benefit.
The Oregon Policy Form Number for New York Life Whole Life Insurance is ICC18217-50P (4/18)