As a financial planner with nearly 30 years of experience, I’ve had the privilege of guiding hundreds of military families through the complex transition to civilian life. A conversation that comes up every single time revolves around their SGLI and the paperwork for something called VGLI.
I’ve seen it firsthand: in the chaos of separation, the VGLI application feels like a safe, familiar choice. A comfortable uniform in a new and uncertain world.
But here’s the hard truth I’ve learned from my clients: what feels like a lifeline at age 28 can become a costly financial trap by age 58.
This isn’t just another article summarizing a government program. This is the guide I give my veteran clients. A deep dive into Veterans’ Group Life Insurance (VGLI) that exposes the hidden costs, debunks the dangerous myths, and gives you a clear framework to decide if it’s truly the best life insurance for you.
We’ll look at the real numbers, compare it to civilian options, and ensure your family’s future is built on a rock-solid foundation, not just a familiar name.
Your VGLI Decision in 60 Seconds
- The VGLI Cost Trap is Real: VGLI is not a level-premium policy. Your rates will increase every five years and can become prohibitively expensive, especially after age 50.
- Guaranteed Acceptance is Time-Sensitive: You have a 240-day window after separation to enroll in VGLI with no health questions. This is its single greatest benefit, particularly for veterans with service-connected disabilities who might otherwise be uninsurable.
- VGLI Isn’t Your Only Option: Healthy veterans can almost always find cheaper, more flexible life insurance on the private market from veteran-friendly companies like Navy Mutual, AAFMAA, or USAA.
- Coverage is Capped: As of 2023, VGLI coverage is capped at your previous SGLI amount, up to a maximum of $500,000. This may not be enough to cover a mortgage and a family’s future income needs.
- Use VGLI Strategically: The smartest move for many is to enroll in VGLI as a temporary “bridge” policy, ensuring you’re covered while you shop for a better long-term private plan.
Key VGLI Takeaways Ahead
First, What is Veterans’ Group Life Insurance (VGLI)?
Veterans’ Group Life Insurance (VGLI) is a government-sponsored group term life insurance program that allows service members to continue their life insurance coverage after leaving the military. It is essentially a conversion of your Servicemembers’ Group Life Insurance (SGLI) into a civilian group policy.
This program is administered by Prudential Financial on behalf of the Department of Veterans Affairs (VA).
Think of it as a renewable term life insurance policy. You pay a premium to maintain coverage, and if you pass away while the policy is active, your beneficiaries receive a tax-free death benefit. Unlike SGLI, which had one low premium for all service members, VGLI premium costs are based on your age and increase over time.
The VGLI Decision: A Deep Dive into the Pros, Cons, and Hidden Traps
Before you commit, it’s crucial to understand the full picture. VGLI has powerful benefits in specific situations, but it also has significant drawbacks that are often overlooked during the hectic military-to-civilian transition.
| Pros (The Good) | Cons (The Bad) | Hidden Traps (The Ugly) |
|---|---|---|
| ✅ Guaranteed Acceptance For 240 days after separation, you can get coverage regardless of your health. This is a critical lifeline for veterans with service-connected disabilities who might be denied private insurance. |
❌ Escalating Premiums This is the biggest drawback. VGLI premiums increase every five years. What starts as affordable can become incredibly expensive as you age. |
🚫 The “Set It and Forget It” Trap Many veterans sign up and never review their policy again. Years later, they’re shocked by a premium that has increased by 10x or more, forcing them to drop coverage when they’re older and less insurable. |
| ✅ No Medical Exclusions VGLI does not exclude coverage for conditions like PTSD or TBI. This provides immense peace of mind for veterans concerned about their health history. |
❌ No Cash Value Unlike whole life insurance, VGLI is a term policy. It has no cash value, savings component, or investment growth. If you cancel it, you get nothing back. |
🚫 The Coverage Ceiling With a maximum of $500,000, VGLI may not provide enough coverage to replace your income and protect a family with a mortgage and future college costs. You can’t simply apply for more if your needs grow. |
| ✅ Easy SGLI Conversion The application process is straightforward, especially within the first 240 days after separating from the military. |
❌ Limited Coverage You can only get up to the amount of SGLI you had when you separated. If you had less than the maximum, you can’t apply for more through VGLI initially. |
🚫 The “Better Options” Blind Spot The VA system is designed to promote VA products. It won’t tell you that a healthy 40-year-old can likely get a 20-year, $500,000 level-term policy from a private company for significantly less than VGLI will cost over that same period. |
VGLI vs. Private Term Life Insurance: The Real Cost Comparison
“Affordable” means nothing without numbers. Here is a direct comparison of official VGLI premium rates versus average private term life insurance rates for a healthy veteran.
Monthly Premium Comparison: $500,000 Coverage
| Age Bracket | VGLI Monthly Premium | Average 20-Year Level Private Term Premium |
|---|---|---|
| 30-34 | $40.00 | ~$25 – $35 |
| 35-39 | $50.00 | ~$30 – $40 |
| 40-44 | $65.00 | ~$40 – $55 |
| 45-49 | $90.00 | ~$60 – $80 |
| 50-54 | $140.00 | ~$90 – $120 |
| 55-59 | $265.00 | ~$150 – $220 |
| 60-64 | $430.00 | N/A (Level term rates become very high to start at this age) |
Common VGLI Myths vs. Reality
Myth #1: “My VA disability rating means I can’t get private life insurance.”
Reality: This is the most damaging myth I’ve seen in my career. A VA disability rating is for compensation, not a life expectancy sentence. Private insurance underwriters assess your specific health conditions and stability. Many of my clients with high ratings for conditions like PTSD, TBI, hearing loss, or back injuries have secured standard rates on private policies because these conditions don’t typically shorten life expectancy.
Myth #2: “VGLI premiums stay the same for life.”
Reality: As shown in the chart above, this is dangerously false. VGLI premiums are on an age-based pricing schedule and increase in five-year age bands. This is the single most important fact to understand when making a long-term decision.
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Private Insurance for Veterans: Navigating Underwriting with Disabilities
For veterans with service-connected disabilities, the thought of private insurance underwriting can be intimidating. However, you have more options than you think.
Many insurers, particularly veteran-focused organizations like Navy Mutual and AAFMAA, specialize in policies for the military community. They understand the nuances of service-related conditions.
Here’s what you need to know:
- Stability is Key:
Underwriters care more about the stability and management of a condition than the diagnosis itself. A veteran with well-managed PTSD who has been stable for 2-3 years may qualify for a standard rate. - Full Disclosure is Non-Negotiable:
Always be honest and thorough on your application. Non-disclosure can give an insurer grounds to void a policy later. - Shop Around:
Get quotes from multiple insurers and ask them directly about their underwriting guidelines for veterans with your specific conditions.
Who is VGLI Perfect For? (And Who Should Avoid It?)
The right choice depends entirely on your personal situation. Here are three common scenarios I’ve encountered with my clients.
- Transitioning Tom (Age 28, Healthy):
- Scenario: Tom just separated and is in good health. He needs to replace his SGLI immediately to protect his young family.
- My Thoughts: Tom should apply for VGLI as a temporary safety net. Simultaneously, he should apply for a 30-year level-term policy from a private insurer. Once he is approved for the cheaper private policy, he can cancel his VGLI.
- Mid-Career Mike (Age 45, with Service-Connected Injuries):
- Scenario: Mike has a 50% VA disability rating for injuries that make him nervous about a medical exam. His VGLI premium is about to increase.
- My Thoughts: VGLI is likely Mike’s best long-term solution. The guaranteed acceptance he received when he separated is now invaluable. The rising cost is the trade-off for insurability that he might not find elsewhere.
- Retirement-Ready Rita (Age 58, Healthy but on a Fixed Income):
- Scenario: Rita, we understand—retirement budgets are tight, and VGLI’s jump to $265/month feels like a gut punch. You’re healthy but worried about affording coverage.
- My Thoughts: You should immediately explore a 10-year level-term policy for a smaller amount, like
100,000–100,000–200,000, from insurers like Guardian Life or Mutual of Omaha, which often offer competitive rates for healthy seniors. This can cover final expenses without draining your retirement savings. Apply now to lock in a rate, then cancel VGLI to free up your budget.
How to Apply for VGLI: A Step-by-Step Guide
Here is the simple, step-by-step process for the SGLI to VGLI transition.
Step 1: Know Your Deadlines (This is CRITICAL)
- First 240 Days Post-Separation: This is the guaranteed acceptance period. You can apply online via your VA.gov account, and you do not need to answer any health questions. This is the best and easiest time to apply.
- Between 240 Days and 1 Year + 120 Days Post-Separation: You can still apply, but you will be required to provide evidence of good health. This means you’ll have to answer medical questions and may be required to undergo a medical exam.
Step 2: Gather Your Information
You will need your service number, Social Security number, and basic personal information.
Step 3: Apply Online
The easiest way is through the VA.gov website.
- Go to the official VA.gov life insurance page.
- Log in with your DS Logon, My HealtheVet, or ID.me account.
- Follow the prompts for the VGLI application.
Frequently Asked Questions (FAQ) About VGLI
Is VGLI term or whole life insurance?
VGLI is term life insurance It provides a death benefit but has no cash value or investment component.
Can I convert VGLI to a whole life policy?
Yes. VGLI policyholders have a conversion privilege, allowing them to convert their coverage to a commercial whole life insurance policy at any time with one of several participating private insurance companies. This conversion is guaranteed regardless of your health.
Is VALife better than VGLI?
Veterans Affairs Life Insurance (VALife) is a whole life insurance program for veterans with service-connected disabilities, offering up to $40,000 in coverage. It has a two-year waiting period for the full death benefit. VGLI offers much higher term coverage amounts and is available to a broader group of veterans.
What happens if I miss the VGLI application deadline?
If you miss the 1 year and 120-day deadline, you are no longer eligible to apply for VGLI. Your opportunity to convert your SGLI is permanently lost.
📚 Explore Your Next Steps
My Final Verdict: Your VGLI Action Plan
After advising hundreds of military families, my thoughts are clear:
Treat VGLI as a bridge, not a destination.
For the vast majority of veterans, the smartest financial move is to secure VGLI coverage within the 240-day guaranteed acceptance window to act as a safety net. With that protection in place, immediately begin shopping for a private, level-term life insurance policy.
If you are healthy, you will almost certainly find a policy that locks in a lower rate for 20 or 30 years, saving you tens of thousands of dollars. If you have significant health issues, VGLI may very well be the best option available—and you should be grateful it exists.
The biggest mistake is inaction. Your transition from the military involves taking active control of your finances. Make a proactive, informed decision about your life insurance—your family’s financial security depends on it.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. All financial decisions should be made in consultation with a qualified and licensed professional. VGLI rates and rules are subject to change; please consult the official VA.gov website for the most current information.
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
