Service-members’ Group Life Insurance
So, I’m leaving the Military. Can I keep my SGLI? You can keep it for 120 days, then the answer is ultimately “No”.
SGLI (Servicemembers’ Group Life Insurance), is a great deal while you are in the service because it provides up to $400,000 in insurance for each servicemember for $28 per month. Servicemembers are automatically enrolled for this coverage but do have the ability to opt-out.
Buying SGLI while serving is typically a “No Brainer” because SGLI requires zero underwriting and all servicemembers pay the same rate regardless of sex, age, physical condition, or smoking status.
However, when you separate from the service, you will need to find another option for your life insurance needs. This is where VGLI (Veterans’ Group Life Insurance) may play a role. VGLI allows you to continue the same level of coverage without having to prove good health. However, you will pay more money for VGLI life insurance premiums, which are age-based. The premiums are the same for men and women and do not take into consideration any of your medical history (provided you convert your policy within 120 days of separation from service). In other words, converting your SGLI policy to a VGLI
policy might be a viable option if you have health-related concerns that might otherwise prevent you from obtaining a good term policy.
While VGLI may be a solution in the short term, the rate you pay goes up every 5 years. Alternatively, you can purchase a 10/20/30 year level term policy that locks in your payment for the long term. Ultimately, VGLI will likely cost more than a commercial policy.
Lastly, how do you know how much life insurance is appropriate for you and your family? You should consult a financial planner to work through those details. Client First Capital can help.
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