A couple of years ago, I canceled my Veterans' Group Life Insurance (VGLI) policy. If you're not familiar, VGLI is a program that allows you to buy between $10,000 and $500,000 in term life insurance when you leave the military. The maximum coverage is the same as the Servicemembers' Group Life Insurance (SGLI) coverage you carried at the end of your service.
To get the coverage, you have to apply within one year and 120 days of leaving the military. You can apply online with the Office of Servicemembers' Group Life Insurance (OSGLI) or by filling out the Department of Veterans Affairs' Form SGLV 8714 to sign up.
Now, back to my journey with VGLI. It served me well for about 15 years, but after consulting with my wife, we decided the juice was no longer worth the squeeze. However, getting rid of VGLI didn't mean taking it in the first place was a mistake; rather, we just decided we no longer need it today. That got me thinking:
At certain times and in certain situations, VGLI might work for you and your family like it did for us. Here are five situations in which that might be the case:
1. You Procrastinated
If you're healthy, you may get more cost-effective coverage in the life insurance marketplace. However, that process can take some time, and if you didn't start early, VGLI can provide an easy way to ensure you don't have a gap in your life insurance coverage, even if you later swap it for a more cost-effective option. One of the nice things about VGLI is that you can get the coverage you need to replace Servicemembers' Group Life Insurance (SGLI) without any medical questions or review. There's only one catch: You have to apply for the coverage within 240 days after separating from service.
2. Your Service Came at a Cost
I've met very few veterans who navigated military service without some wear and tear, both physically and mentally. As mentioned above, VGLI offers coverage to replace SGLI without medical questions, and this may be very helpful if you would struggle to get cost-effective coverage in the marketplace for any number of reasons. Later on, you can convert VGLI coverage to a permanent life insurance policy through participating carriers without proof that you are in good health.
3. You Use Tobacco
One reason you may struggle to get cost-effective coverage is that tobacco users typically pay dramatically more for their life insurance. Even though VGLI premiums increase over time -- every five years as you hit age 35, 40, etc. -- if you use tobacco, they may be competitive for you over the long haul.
4. You Anticipate Needing Coverage for Only a Limited Time
VGLI can be very cost effective -- until it's not. As I noted, the cost goes up in five-year bands. To give you a sense of how it works, $500,000 of VGLI coverage for a veteran under age 30 costs $35 per month. However, for a 55- to 59-year-old, the price jumps to $300 per month, and in the 65-69 age band, it's $735. My point is simply this: If you assess your overall financial and family situation and anticipate needing life insurance coverage until, say, age 50, VGLI could work well for you.
5. You Want Options
You can quickly fill out a VGLI application and get the coverage. If you need a quick solution without a big commitment, do it. The good news is that if you find a more cost-effective solution or no longer need the coverage, you can cancel your VGLI by visiting the OSGLI website or even with a quick phone call.
Life insurance is a key component of your overall financial game plan. As you make the move to civilian life, evaluate your options and ensure you continue to protect the ones you love.
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