Hello folks, Derek Merkler here again with a new tip of the week, this time reviewing Veterans Group Life Insurance or VGLI.
VGLI is offered through the Department of Veterans Affairs and is, in some ways, a continuation of SGLI. Remember, SGLI coverage ends 120 days after ETS.
VGLI offers up to $400,000 of life insurance coverage as well, but it differs slightly in cost. While the cost for SGLI in service is the same for all servicemembers, VGLI rates increase with age. In this way, it resembles group life insurance options offered by many employers.
For example, $400,000 in coverage under VGLI would cost $40 per month for a 30-year-old but would increase to $52 for a 35-year-old and $68 for a 40-year-old. Basically, the cost rises in 5-year increments. At higher ages, say 55 for example, the cost is $268.[i] Those are today’s rates, by the way; they can all be increased in the future.
So why use VGLI? Well, first off, no medical exam is required if you sign up for VGLI within 240 days of ETS. 240 days is about 8 months. Because there is no exam, VGLI could be less expensive and easier to get than other term policies should you have any health problems following your service. It’s also a viable short-term replacement if you go to school for a period after you finish your service or if your next employer does not provide insurance options as part of their benefits package.
Ultimately, VGLI has two major drawbacks. First, it’s relatively expensive at all ages for a relatively healthy person. Many level-term life insurance policies are available that cost less per month and also will not rise over time. The second drawback is the $400,000 maximum. Many individuals completing their service in their 30s and 40s will need well beyond $400,000 in coverage.
As always, if you have questions on this or any other financial topic, or if you want to work with me to develop your financial plan, send me a message using the info posted in the credits. Until next time!
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Remember, the topics discussed in this video are for informational purposes only and that past results do not guarantee future performance. If you would like to discuss your financial situation, please email me at Derek.Merkler@Parsonex.com.
Advisory services offered through Parsonex Advisory Services, Inc., 8310 S.Valley Hwy, Suite 110, Englewood, CO 80112. 303-662-8700.