facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck Play Pause
SGLI Ended. Don't Want VGLI. Now What? Thumbnail

SGLI Ended. Don't Want VGLI. Now What?

Insurance

VGLI Isn't the Only Option

Most retiring senior military officers or NCO's are aware of Veterans Group Life Insurance (VGLI). The good thing about VGLI  is that if you apply for coverage within 120 days of retiring, you don't have to answer any health questions or provide proof of insurability. The bad thing about VGLI is that the premiums increase every five years and can become very costly or even cost prohibitive.

What many aren't aware of is that there is another option. Converting to an individual policy at standard rates. 11 different companies offer conversion options to a whole life policy without any health questions as well.

SGLI to Individual Policy. How Does it Work?

You can convert your Servicemembers Group Life Insurance (SGLI) and your Family SGLI (FSGLI) policy on your spouse to an individual policy. You can also convert a VGLI policy to an individual policy as well. The one you can't covert is FSGLI for children. Like VGLI, in order to convert your SGLI to an individual policy without any health questions, you must apply within 120 days of a qualifying event. A qualifying event for a service member would be  separation from service. In the case of a spouse their are more events that qualify for conversion. These include separation of the servicemember, death of the service member, divorce, and termination of SGLI or FSGLI. You'll have to provide several documents which vary depending on the reason for conversion. At a minimum you'll have to provide a final Leave and Earnings Statement (LES).

In the case of VGLI, if you're covered by VGLI, there is no time limit and you only need to provide a VGLI conversion notice.

It is important to note that you can only convert to a whole life policy. Term, Universal Life and other types of life insurance policies are not options. Options with riders, such as waiver of premiums, are limited.

Should You Convert SGLI to an Individual Policy?

Like with most questions concerning life insurance, it depends on the need. If you need the coverage even if you live to a ripe old age, then converting to an individual whole life policy may be the best option. You'll pay higher premiums now, but eventually they will likely be lower than VGLI premiums.

Conversely, if the insurance need is temporary, funding college for a child as one example, then converting to VGLI may be the better option.

Of course, if you elect the Survivor's Benefit Program (SBP), which I think most retiring senior military officers and NCO's should do, additional insurance may or may not be required. 

Also, if you're in good health, an individual policy where you do undergo medical underwriting may be the better option.

Military Members Need Military Specific Financial Advice

Retirees from the corporate sector don't necessarily have equivalent options. If you work with a generic financial planner you can expect generic solutions. If you want solutions to reflect your unique military and veteran situations, work with a financial advisor that sleeps, eats and breathes military financial planning. 

If you liked this article, you might enjoy the following blog posts:

To SBP or Not SBP? That is the Question


SBP and DIC


Is VA Long-Term Care a Replacement for Long-Term Care Insurance?





Disclaimer
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. C.L. Sheldon & Company, LLC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to C.L. Sheldon & Company, LLC website or incorporated herein, and C.L. Sheldon & Company, LLC takes no responsibility therefore. All such information is provided solely for convenience, educational, and informational purposes only and all users thereof should be guided accordingly. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.