Life Insurance. If you never thought about it while you were in the service, I don't blame you. It was there to protect your family in case something happened to you, $8.50 came out every month for $400,000 of insurance, and you never had to worry about it, But now that you are leaving the service, you do need to think about it, because you have some decisions to make.
While you were active duty, you and your family were protected by the Servicemembers’ Group Life Insurance (commonly referred to as the SGLI). 120 days after your separation, that won't be available to you anymore. So, what are your other options.
One option for separating service members is the Veteran's Group Life Insurance (VGLI)
The VGLI can cover you up to the amount the SGLI covered you when you separated, or less amounts down to $10,000. The monthly cost depends on the age of the service member, and if the service member applies within 240 days after separation, there are no health questions.
The deadline to enroll in the VGLI is 1 year and 120 days after separation.
You can receive a discount if you make your payments annually, quarterly, or semi-annually (5% if you pay annually, less for quarterly and semi-annually).
Here are some other details of the VGLI:
1. Lifetime Coverage Once obtained, you can keep your coverage for your entire life regardless of changes to your health or job status, as long as premiums are paid.
2. No Proof of Good Health Required
Apply within 240 days of your date of separation and no health questions are asked. If you apply after 240 days from your date of separation, you will need to answer health questions.
3. Standard Premium Rates
Premium rates are based on age and coverage amount only. Rates are the same regardless of gender or tobacco use.
4. Coverage Increase Option
You can increase your coverage by $25,000 every five years up to the legislated maximum of $400,000, until age 60. No proof of good health is required.
5. Conversion Option
You have the option to convert your coverage to an individual insurance policy at any time.
6. Accelerated Benefits Option
You can receive up to 50% of your VGLI benefit while still living, if you have a written prognosis from a doctor of nine months or less to live. You can use these funds for any reason including paying off debt, travelling, or setting up an education fund.
7. Beneficiary Financial Counseling Service
The Department of Veterans Affairs (VA) makes financial planning available at no cost to your beneficiaries after they receive their benefit. This service can help them make the most of the funds they’ve received. They’ll also have access to an online will preparation service at no cost.
Other Insurance Companies
Ask your bank or search online for quotes. Figure out how much you need or want for your family. The SGLI covered you for $400,000, but depending on family needs, you might want more or less. Also, the amount you want will also depend on whether your wife will receive the Survivor's Benefit Plan (SBP), which provides the spouse a monthly payment or annuity to replace the loss of your retirement paycheck upon the service member's death.
My bank is USAA, and after discussing the issue of life insurance with them, this is what I came up with: a total of $400,000 for 20 years, and then $100,000 for the rest of my life after that. They quoted me $96 a month for 20 years (be then I'll be 70 years old) for $300,000 of coverage term life insurance. I combined that with $162 a month for $100,000 of whole life insurance. This would be a grand total of $258 a month.
When I compare this to the VGLI, for $400,000 I would pay $144 a month until age 55, and then I would have to pay $268 for the next five years, $432 for the next five, and finally $600 for the last five years until I reached 70 years old. And then if I started paying for $100,000 after 70 years old they would charge me $230 until age 75 and then $460 after that.
Given all that, the USAA proposal is a lot better deal, I would just pay $114 more the first five years, then I'm saving a heck of a lot money afterward.
Decisions
The VGLI has its place, don't get me wrong. You can get covered with health insurance without a health exam, and that's a good thing if you have been injured or have severe medical problems due to your time in the military. Also, the VGLI doesn't consider your tobacco use in their coverage.
However, if you are healthy it might pay to shop around.
In future posts, I'll discuss my final decisions for life insurance after the military and also about the SBP.
Thanks,
RR
Resources
VGLI Video
Apply for VGLI
VGLI Premiums
No comments:
Post a Comment