Does Military Life Insurance Continue After Retirement


Does Military Life Insurance Continue After Retirement

Should you replace SGLI After Transition? Military Retirement Insurance SBP vs VGLI Explained

Your SGLI ends 120 days after you retire or transition from U.S. military service. Retiring and transitioning veterans have the option to convert their SGLI to Veterans’ Group Life Insurance . … You can also replace your SGLI by purchasing life insurance from a non-government provider such as USBA.

Don’t Wait To Find Out If You Qualify

When the topic of life insurance comes up during active duty service, it is usually about the SGLI, and the response is typically, Im good for insurance. I dont have a family yet, and SGLI will take care of it for me when I do. This creates a tremendous risk of never being able to qualify for a privatized option in the future, should some medical issue come up during service. It is in everyones financial best interest to qualify for private insurance when they are young and healthy and not wait until they are in their thirties and forties and leaving service with a number of medical issues. SGLI ends with active duty, so using it as a safety blanket backfires time and again when transitioning service members are not able to qualify for any other life insurance options and have no choice but to take VGLI. This a shocking oversight with a costly outcome.

In order to qualify for the Private Pension System, it is necessary to go through the application and underwriting process. Dont let this concern you, even if you have a disability rating, use tobacco, are a pilot or Special Forces, have a pre-existing health condition, or use cannabis, none of things are automatically going to disqualify you. With regards to the disability rating, many retiring service members receive disability ratings from the VA for issues that are relatively minor and of no concern at all to life insurance underwriters.

Do VA Disabilities Prevent Me From Qualifying? Nope.

Eligible Monthly Payments For A Deceased Service Member

In the pre-9/11 era, when this occurred, the active-duty death benefits for a surviving spouse were insufficient. While overall compensation has improved for eligible survivors, many gold star families are still shocked at how little they receive in comparison to what they would have received in retired pay had there not been an early death.

We need to face the reality that the Government accounting office knows it saves money when a Veteran isn’t alive very long. Sorry, but that’s the truth.

It’s the same problem we see with Social security. The payments made today are for a future promise. But there is nothing of stored value with your name on it. Payments for today’s retirees come from today’s new social security taxes on workers. If they live too long, there isn’t enough new Soc. Sec. taxes to pay for it.

The Social security system was designed when they only expected retirees to live a couple of years past retirement. Life expectancy was only 65! We are living longer and prices are going up.

These problems are no different when it comes to how a military pension and the veteran’s death benefits work.

The only way to ensure you have a proper death gratuity is to design a personalized strategy in the unlikely event of the service member’s death.

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Start The Life Insurance Process Early

You will want to start researching insurance at least a year before your transition, for several reasons:

  • The underwriting process might take a while. If your underwriting decision comes back with results that are different than you expected, youll want to have enough time to consider VGLI or going through the process with another insurance company.
  • Youll want enough time for your disability claim, whether or not you are sure that youll file one. You might not file a disability claim. However, if you file a claim before applying for insurance, youll be asked to disclose any related information. This can include any information related to the claims process . This might impact the underwriting decision.
  • If you do not intend to file a claim at the time you apply for insurance, you can obtain a policy without having to disclose health concerns that you dont know about. If, after youve obtained a policy, you change your mind and decide to go through the VAs disability claims process, the insurance company cannot change your contract as long as you did not misrepresent or knowingly omit relevant health information during the process.

    When To Convert Sgli Into Private Life Insurance

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    Some insurance companies partner with the military to offer civilian life insurance policies to veterans. Service members with SGLI have 120 days from the day they leave active duty to convert their policy to a private life insurance policy with a participating provider.

    These providers dont require a medical exam to convert your policy, so youll be approved for the same amount of SGLI coverage you had at a predetermined rate. If you know you want a private insurance policy but have health concerns that will raise your rates, this is worth considering. However, you have a shorter window to compare quotes for your new policy than veterans with VGLI.

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    Additional Coverage For Your Family

    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.

    How Many Years Do You Have To Pay For Sbp

    SBP premiums are deducted automatically from your pension each month for 30 years. If you die before the 30 years are up, your spouse would continue to receive SBP benefits regardless.

    You cannot cancel your SBP coverage, and you will not be refunded for any premiums you have paid should your spouse pass away before you. .

    You’re required to pay for SBP for as long as you remain married to your military spouse. If you divorce, you’ll need to cancel your SBP coverage.

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    Prepare Financially For The Unexpected

    Conversations around retirement planning typically revolve around money and life insurance for military retirees. How much money will you need to live on? How much will you need to save? How much income will your savings generate? Will you have enough? This focus on money tends to steer conversations with the typical financial advisor in somewhat dubious directions, each one claiming to have a better collection of funds, or a better track record for choosing high-performing funds, than the others.

    Money is important. In fact, money is essential. But in this post, I am not going to talk about money as money, Im going to talk about money through the lens of something thats more important than money: taking care of yourself and your loved ones.

    What Happens To My Life Insurance When I Leave The Service

    FEGLI in Retirement

    The first thing to realize is that SGLI is only available for 120 days after separation from service or retirement. Your TSGLI & FSGLI are dependent upon your ability to maintain SGLI coverage, so you will also lose that coverage when you are no longer eligible for SGLI. However, the VA does give you several options to transition from SGLI to similar post-military coverage.

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    The Costs Of Veteran Survivor Benefits

    What nobody tells you during your retirement briefings about death benefits for a surviving spouse is that in the long run, the amount of money the beneficiary receives from the SBP annuity is usually considerably less than what the monthly premium amounts could have generated as investments and insurance in the private marketplace.

    Best For Senior Veterans: American Armed Forces Mutual Aid Association


    • AM Best Rating: Not rated

    AAFMAA offers life insurance policies tailored especially to senior veterans. It has several policies to choose from and covers veterans up to age 84.

    • Offers a cheaper alternative to VGLI

    • Offers no medical exam insurance policies

    • Has been in business for more than 140 years

    • Coverage not available in all states

    Founded in 1879 when the War Department realized there was a need to take care of soldiers after Custers Last Stand, AAFMAA offers term-life insurance and whole life insurance, specifically for veterans, with coverage available nationwide .

    In addition, the company offers no medical exam life insurance policies, including ANNUITYLife, Wealth Builder Life, and the Senior Survivor Plan, all of which are designed for older veterans and their spouses.

    Instant online quotes are available on AAFMAAs website, without having to speak with an agent. Otherwise, interested customers can speak to an insurance sales representative over the phone, Monday through Friday from 8:30 a.m. to 5:30 p.m. EST.

    The companys Level Term I plan offers coverage up to age 49 and its Level Term II offers options ranging from five to 30 years of term life coverage.

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    Do Retired Veterans Automatically Have Life Insurance

    Many retirees don’t realize that they’re eligible for life insurance through the Veterans Group Life Insurance program. VGLI is a 5-year renewable term life insurance policy for veterans who have separated from the military. You can convert your VGLI policy to a permanent life insurance policy without having to undergo a medical exam.

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    Some VA lenders are tailored for borrowers with weaker credit, while others offer a larger variety of VA loan types. The best way to determine if you are eligible is to start by connecting with a lender. Lenders can pull your Certificate of Eligibility in minutes to see if you meet the basic service requirements and have VA loan entitlement. Additionally, a lender can review your financial information to determine if you meet credit and income guidelines.

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    Cost Of Health Insurance

    How much you’ll pay for health insurance depends on which program option you’re in and which health plan you’ve selected. Find your program option by visiting the Benefits Available to Me page. Once you’ve selected your program option, click on the Health Insurance card and look for health care premium rates.

    Can My Service Member Get Extended Coverage For Our Dependent Child

    Yes, in some cases. Coverage lasts until the child is 18 years old. But, if the child is a full-time student between 18 and 22 years old, we may extend the coverage. Or, if the child becomes permanently and totally disabled before turning 18 and is no longer able to support themselves, we may extend the coveragein some cases indefinitely.

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    Purchase A Commercial Term Life Insurance Policy

    For a lot of people, term insurance is an appropriate choice for several reasons.

    First, in many cases, you can purchase a 10, 20, or 30-year level-term policy. A level-term policy simply states that the premium stays the same for that period of time. Contrast this with VGLI, where the rates go up every 5 years. Over time, you may find yourself paying a LOT more for VGLI than you would for similar term coverage. This is especially true for women, non-smokers, and people in outstanding health, who pay the VGLI rate as men, smokers, and people in poor health. Commercial policy underwriting takes many factors into consideration when pricing out a policy.

    Second, you can provide yourself much more protection. While this article wont tell you how to determine how much insurance you need, there are many cases in which $400,000 coverage just doesnt begin to address the loss of income and savings potential over the insureds career. A commercial policy can cover much more than the VGLI amount, which can make a significant difference in your beneficiarys quality of life in the case you die.

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    Service Disabled Veterans Insurance: Dont Miss This Opportunity

    Social Security Benefits. The maximum amount of Social Security benefits you can receive based on an ex-spouses record is 50% of what your ex-spouse would get at their full retirement age. This varies based on their year of birth. The spousal benefit amount is further decreased if you file before you reach your own full retirement age. 3. 20/20/15 Rule. If the marriage lasted 20 years and the service member served 20 credible years in the military but only 15 years overlap between the two, the former spouse is eligible for one year of health benefits as long as s/he does not remarry and does not have employer-sponsored health insurance. After the year has expired, a 20/20/15.

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    How Do I Know Which Life Insurance Choice To Make

    You need to consider your options. For a lot of people, a term life insurance policy might be feasible, because they dont have many underwriting concerns. However, if you think you might have concerns about the underwriting process, you might find that VGLI is a better option. Either way, you probably wont know for sure until you start the underwriting process.

    Consolidate Your Military Financial Planning With The Private Pension System

    Here at US VetWealth, we offer a financial planning for military retirees options that not only provides a death benefit and solves the problem of funding retirement, but that also give you significant equity growth that can be tapped to pay for long term care costs while you are still alive. We call it a private pension account.

    Although this new, modern approach to privatizing traditional military and private insurance options has been around for a few years, few financial experts and professionals are aware of it or its advantages. The key differences between the Private Pension System and what most think are the only other solutions , whole life, and long-term care insurance) are flexibility and control:

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    Rates Table For Retired Military



    VGLI rates as provided by the Department of Veterans Affairs . Rate illustration valid as of 2/08/2022. Term life insurance rates methodology: Sample monthly premiums are for 40-year-old male non-smokers with a Preferred health rating buying a 30-year term life insurance policy Life insurance averages are based on a composite of policies offered by Policygenius from AIG, Banner, Brighthouse, Lincoln, Mutual of Omaha, Pacific Life, Protective, Prudential, SBLI, and Transamerica and may vary by insurer, term, coverage amount, health class, and state. Not all policies are available in all states. Rate illustration valid as of 8/1/2022.

    Life Insurance For Veterans With Ptsd

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    The number of veterans diagnosed with post-traumatic stress disorder varies by service era. The VA estimates that between 11% to 20% of veterans who served most recently in Operations Iraqi Freedom and Enduring Freedom have PTSD in a given year.

    If you have been diagnosed with PTSD, it may be difficult for you to purchase a private life insurance policy at an affordable rate, especially if the diagnosis is new or if PTSD keeps you from working.

    You can usually get life insurance if you have PTSD, but your rates will be higher if your diagnosis is more severe or harder to manage. The life insurance company will want to see a long history of successful treatment with medication and therapy and evidence that you can work.

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    Are Payments From Life Insurance Taxable

    In most cases, when the beneficiary or beneficiaries of a life insurance policy receive the associated death benefit, the money paid out is not considered income that is taxable. Therefore they do not have to pay taxes on the income received.

    There are however a few potential situations in which the beneficiary can be taxed on a portion or the entire amount of money paid out. If the policyholder decides not to have their death benefit paid out immediately after their death, but instead held by the provider, the beneficiary may have to pay taxes on any interest earned during that period of time.

    Does My Spouse Get My Military Retirement If I Die

    For the most part, military retired pay stops upon the death of the retiree insured.In terms of spousal support in situations of military retiree death, there is a plan that is available for those situations.

    The Survivor Benefit Plan or SBP allows retirees to ensure that after their passing, a continuous lifetime annuity is paid to their eligible dependents. The annuity is based on a percentage of retired pay and supports eligible survivors with an inflation-adjusted monthly income.

    Military retirees pay premiums for SBP coverage after retirement has occurred. Premiums are paid with regards to gross retired pay which means they do not count as income and therefore require less tax and less out-of-pocket costs for SBP.

    The maximum SBP annuity for the spouse is based on 55 percent of the policyholders retired pay. However, a smaller amount may be offered. Coverage is also available for a former spouse or, if the retiree has no direct dependents, can be applied to an insurable interest such as a business partner or parent.

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    When To Choose Vgli Over Private Life Insurance For Veterans

    There are certain instances when it makes sense to get VGLI instead of private coverage. The biggest reason why someone might choose VGLI is if you have medical conditions that make it hard to qualify for traditional life insurance. This isnt just limited to PTSD, but other disabilities and medical conditions as well, including those you might have gotten from combat. Mental health conditions, neurological conditions, and heart conditions can all affect your ability to get insured.

    If you are 60 years or older and applying for life insurance, youll find that a private life policy is very expensive. Even VGLI premiums can get very costly the older you are. But, if you are an older individual looking for lower coverage amounts to cover final expenses, VGLI rates might be more affordable.

    Every veteran has a unique health history and life insurance needs, and the best provider for one person may not be the best for another. Others may be better off staying on a VGLI policy. You can find the right life insurance policy by working with an independent broker like Policygenius.

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