Retiring from the military, like retiring from any job, is a crucial time to reevaluate your finances. Compensation, perks, and benefits change upon retirement or separation from service, including life insurance coverage. Some military retirees go on to new careers and jobs, but others may choose to fully retire, depending on their age, service-connected disabilities, or other factors.
All people retired from the military service are veterans, but not all veterans are military retirees. For the most part, this distinction won’t affect the life insurance plans available to you. We’ll explore the different life insurance options for military retirees and veterans below.
Life insurance terms you should know
Beneficiaries: The people you name on your life insurance policy to receive the lump sum of money — also known as the death benefit — when you die.
Cash value: The portion of a permanent life insurance policy’s monetary value that grows tax-deferred over the life of the policy.
Death benefit: The amount of money the life insurance company will pay your beneficiaries when you die.
Face amount: The dollar amount, or death benefit, your beneficiaries receive if you die while your life insurance policy is active.
Insured: The person who is covered by the insurance policy.
Policy: The legal document that includes the terms and conditions of your life insurance contract.
Policyholder: The person who owns an insurance policy. Usually, this is the same person as the insured.
Permanent life insurance: A type of life insurance that lasts for the rest of your life and usually includes a cash value account.
Premium: The amount you pay your insurance company to keep your coverage active. Premiums are typically paid monthly or annually.
Riders: Add-ons to a life insurance policy that provide more robust coverage, sometimes for an extra cost.
Term life insurance: A life insurance policy that lasts for a set number of years before it expires. If you die before the term is up, your beneficiaries receive a death benefit.
Underwriting: The process where an insurance company evaluates the risk of insuring you and determines your final rate.
Military retirees vs. veterans
The amount of time served in the military is the main distinguishing factor between veterans and military retirees. Veteran status refers to anyone who enlisted in the military and was discharged for any reason other than dishonorable, while military retirees have worked in the military for at least 20 years.
For life insurance purposes, this differentiation makes little to no difference in the plans and options available. We cover life insurance options for veterans in-depth here.
How to convert your policy
Servicemembers’ Group Life Insurance (SGLI) offers affordable term life insurance coverage to eligible service members. If you had an SGLI policy while you served in the military, you can convert your life insurance to a Veterans’ Group Life Insurance (VGLI) policy when you separate or retire.
How do I apply for VGLI when I leave the military?
When you leave the military, you only have one year and 120 days to either convert your existing coverage and enroll in a VGLI plan. It’s important to act quickly to avoid any gaps in protection.
If you choose to enroll in the VA-sponsored VGLI policy, then you’re eligible for coverage up to the face value amount you had while serving. For example, if you had a $400,000 SGLI policy (the maximum amount offered) then you’d be eligible for the same amount.
One perk of converting between military-sponsored insurance plans is the ability to skip the medical exam if you already have an SGLI policy.
To qualify for VGLI coverage, you must be a former service member or veteran and at least one of the following must be true:
Had part-time SGLI and suffered an injury or disability while serving that disqualifies you for standard insurance rates
Had SGLI while serving and are within one year and 120 days of being released from an active-duty period of 31 or more days
Are within one year and 120 days of retiring or being released from the Ready Reserves or National Guard
Are within one year and 120 days of assignment to the Individual Ready Reserves (IRR) of a branch of service, or to the Inactive National Guard (ING)
Are within one year and 120 days of being put on the Temporary Disability Retirement List (TDRL)
How do I convert my SGLI policy to a civilian policy?
The U.S. Department of Veterans Affairs (VA) has a guide to help veterans convert their policies to private life insurance. Like a VGLI conversion, to qualify for a SGLI policy conversion to a civilian policy, you have one year and 120 days from your last day of service.
Policygenius partner insurers, Prudential and SBLI, are participating life insurance companies that allow SGLI conversions.
How much does life insurance for veterans cost?
VGLI policies are permanent, so they do not expire as long as you pay premiums. Premium rates are based on your coverage amount and age, similar to private life insurance premiums. VGLI premiums are not fixed, so they will increase as you get older, regardless of your age when you enrolled in the policy.
VGLI monthly premium rates by age for $400,000:
Age | VGLI Monthly premium |
|---|---|
29 and under | $28 |
30 to 34 | $36 |
35 to 39 | $48 |
40 to 44 | $64 |
45 to 49 | $84 |
50 to 54 | $132 |
55 to 59 | $240 |
60 to 64 | $396 |
65 to 69 | $588 |
70 to 74 | $904 |
75 to 79 | $1,712 |
80 and over | $1,800 |
Rates are based on age and coverage amount, as provided by the Department of Veterans Affairs (VA).
VGLI rates vs. private life insurance rates
To compare the costs of VGLI to those of a private policy, we pulled numbers for a nonsmoking, 40-year-old male in good health with no family history of disease. When you get a term life insurance policy, the rate stays the same for the length of the entire policy (also known as level term life insurance). For a private $400,000, 30-year term policy, they would pay $59.16 a month for the entire time insured.
VGLI vs. private insurance monthly premium rates by age for $400,000:
Age | VGLI rates | Private term life insurance rates |
|---|---|---|
40 to 44 | $64 | $59.16 |
45 to 49 | $84 | $59.16 |
50 to 54 | $132 | $59.16 |
55 to 59 | $240 | $59.16 |
60 to 64 | $396 | $59.16 |
What is Service-Disabled Veterans Life Insurance (S-DVI)?
Service-Disabled Veterans Life Insurance provides coverage to veterans with a service-connected disability. S-DVI stopped taking new applications after December 31, 2022 — but if you already have a policy, you're allowed to keep it.
The VA has a new program for service-disabled veterans called Veterans Affairs Life Insurance (VALife) that you can switch to. VALife is guaranteed-acceptance whole life insurance worth up to $40,000 in benefits.
There is a two-year waiting period after you apply for VALife, but you can keep your S-DVI policy until your VALife coverage starts (at least until 2026 when new changes will take effect).
Life insurance for senior military retirees
Because military retirees may have served for longer than other veterans (at least 20 years), they have specific life insurance considerations depending on their retirement age.
Most seniors don't need life insurance unless they have outstanding debts or beneficiaries. Advanced age also leads to higher life insurance premiums due to the higher risk of mortality. Underlying medical conditions or service-related disabilities may also cause higher life insurance rates.
Aside from a VGLI or private life insurance policy, senior retired military members should consider how much life insurance (if any) they still need. For most seniors, including military retirees and veterans, it’s more cost-effective to put the money you would apply toward those premiums into a stable investment or savings account for your family.
