Life insurance for active service members and veterans
All insurance is about the assessment of risk and, by definition, any group that is employed to enter combat zones or other areas where there's an active source of danger is going to find it difficult, if not impossible, to get insurance from the private life insurance companies. Hence, the US Department of Veterans Affairs introduced the Servicemember's Group Life Insurance (SGLI) package. In conjunction with the Prudential Insurance Company, everyone who is a member of the uniformed service of the US military is entitled to cover. This applies whether the individual is on active or reserve duty. It should be said this has not been uncontroversial and, in 2010, it was suggested the Prudential was delaying payment to the families of deceased service members so it could make additional investment profits. Although there are alternatives offered by the Uniformed Services Benefit Association, the Military Benefit Association, and so on, they have only picked up a small percentage of the market.
Veterans who were covered by SGLI and have been released from active duty have 240 days to apply for the Veterans Group Life Insurance (VGLI) if they want to avoid a medical exam. Those who apply within time, are eligible without having to meet conditions of good health. If they delay beyond the time limit, they are required to show they currently enjoy good health. Overall there's a deadline of one year and 120 days for the conversion. If more than this time elapses, you're no longer eligible to join VGLI.
Both SGLI and VGLI offer cover in units of $10,000 up to a maximum of $400,000. But when it comes to the conversion from SGLI to VGLI, the general rule is you cannot increase the amount of cover. It must be at the same or a lower level of cover. The exception applies to anyone under the age of 60 and holds a VGLI policy for less than $400,000. Without having to go through a medical, you can buy up to $25,000 at five year intervals to top up to the maximum.
The premium rates
If you have the maximum $400,000 cover, the monthly rate varies from $32 at the lowest age range of 29 years or less, to $268 for the highest range from 55 to 59. The complete chart is published on the Department of Veterans Affairs website.
Can you convert to a policy issued by a private life insurance company?
Once you give up active service, you can covert to one of the policies offered by one of the insurers approved by the Department of Veterans Affairs. You have to apply directly to the company within 120 days of retiring. This is an automatic conversion without having to prove good health. The same right applies to a policy covering your spouse under the Family SGLI program.