There are several layers of available life insurance protection for veterans of the United States Armed Forces. The first layer is, of course, the private insurance market. Many companies specifically market to military members, veterans and their families. The second layer is Servicemen's Group Life Insurance, which provides subsidized life insurance coverage of up to $400,000 in death benefits for those currently serving. The third layer is VGLI, or Veterans' Group Life Insurance.
Private Life Insurance Carriers
As most military families are young, term insurance is by far the predominant concern. Because the first $400,000 in term coverage for active duty and drilling reservists is heavily subsidized, most military families turn to private carriers only for amounts above that figure. When selecting a policy, look for a carrier that does not have an "act of war" exclusion in the policy. Once the veteran leaves the service and no longer qualifies for SGLI coverage, private life insurance is frequently a much better value, provided the veteran remains in good health. Prominent life insurance carriers that cater to military members include USAA and First Command Financial Services. Many other prominent companies are happy to have military business, however.
Servicemen's Group Life Insurance
Servicemen's Group Life Insurance, or SGLI, is the subsidized life insurance program for active duty and active reserve members. Service members can purchase up to $400,000 in death benefits upon reporting for initial entry training. The cost is 6.5 cents per $1,000 of coverage. Service members can also purchase spousal coverage of up to $100,000, in increments of $10,000.
Veterans' Group Life Insurance
Once the veteran has left the service, he becomes eligible for Veterans' Group Life Insurance. The SGLI coverage automatically continues -- albeit at a higher premium -- and the veteran is guaranteed to qualify. There is no additional medical underwriting to stay in the VGLI program. VGLI premiums gradually increase over time; eventually, they may become unaffordable.
Neither VGLI nor SGLI offer permanent life insurance, nor cash value within the policies. Coverage remains in force only as long as you pay premiums. Eventually, as premiums become unaffordable in VGLI or with a private term insurance carrier, you may be forced to let the policies lapse. If you want a permanent death benefit -- designed to pay out no matter how long you live -- you will need to use a private insurance carrier. Some companies have special programs to offer a limited death benefit permanent policy with streamlined underwriting to veterans. Speak with a licensed insurance agent about that possibility.